Walmart Posts Record 4Q Revenues As eCommerce Sales Boom; Shares Dip 6.5%

Walmart posted strong fiscal 4Q sales driven by booming eCommerce sales as consumers shopped from home due to pandemic-led restrictions. However, shares declined almost 6.5% to close at $137.66 on Feb. 18, as the US multinational retail company expects sales, operating income, and earnings to decline this year, including the impact of expected divestitures.

Walmart’s (WMT) 4Q revenues increased 7.3% to $152.1 billion on a year-over-year basis, topping analysts’ expectations of $148.47 billion. Adjusted earnings increased marginally to $1.39 per share, but missed the Street estimates of $1.51 per share.

The company’s US comp sales grew 8.6% in the quarter, while US eCommerce sales surged 69%. International net sales came in at $34.9 billion, up 5.5% year-over-year.

Walmart CEO Doug McMillon said, “Change in retail accelerated in 2020. The capabilities we’ve built in previous years put us ahead, and we’re going  to stay ahead. Our business is strong, and we’re making it even stronger with targeted investments to accelerate growth, including raises for 425,000 associates in frontline roles.” (See Walmart stock analysis on TipRanks)

For the fiscal year 2022, excluding divestitures, the company expects total net sales to grow in the low single-digits. Total operating income and EPS are anticipated to be flat or up slightly. Capital expenditures of approximately $14 billion are expected.

Concurrent with the earnings release, the company announced a hike in its annual dividend by almost 2% to $2.20 per share, reflecting a quarterly dividend of $0.55 per share. This marks the company’s 48th consecutive year of dividend increases. The company’s annual dividend now reflects a dividend yield of 1.6%.

Following the 4Q results, Oppenheimer analyst Rupesh Parikh decreased the stock’s price target to $162 (17.7% upside potential) from $165 and reiterated a Buy rating. “Although the bottom-line delivery is disappointing,” the analyst believes “the underlying health of the business remains intact and top-line guidance suggests continued momentum even with difficult compares.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 9 analysts suggesting a Buy, 2 analysts recommending a Hold and 1 analyst suggesting a Sell. The average analyst price target of $160.20 implies more than 16% upside potential to current levels. Shares have jumped about 18.7% over the past year.

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Walmart is currently Very Positive as 18 hedge funds increased their cumulative holdings of the stock by 1.9 million shares in the last quarter.

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