Market News

Why Walmart Stock Fell 11.4% after Reporting Earnings

Retail giant Walmart Inc. (NYSE: WMT) reported weaker-than-expected results for the first quarter of Fiscal Year 2023 yesterday. The disappointing results were on the back of both revenues surpassing but earnings missing estimates.

Consequently, following the muted results, shares of the company plummeted 11.4% in yesterday’s trading session. The stock is continuing its slide today, as it is currently down almost 7%.

Revenue & Earnings

Walmart’s revenue for the quarter came in at $141.6 billion, up 2.4% from the prior year. The company attributed the low top-line growth to the negative effects of divestitures and currency fluctuations to the tune of $5 billion and $0.4 billion, respectively. Yet, the figure surpassed the consensus estimate of $138.94 billion.

Earnings per share (EPS) for the quarter stood at $1.30, which denotes a decline of 23.1% from the previous year. Further, the figure failed to top the consensus estimate of $1.48.

Other Operating Metrics

Walmart’s operating income at the end of the quarter stood at $5.3 billion, down 23% from the previous year. Notably, the company’s gross profit rate also declined 87 bps to 23.8%.

However, Walmart’s global advertising business grew more than 30% year-over-year.

Wall Street’s Take

The consensus among analysts regarding WMT stock is a Strong Buy based on 21 Buys and five Holds. The average Walmart price target of $157.08 implies upside potential of 27.3% from current levels. Shares have declined 11% over the past year.

Walmart’s Website Traffic

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Walmart’s performance this quarter.

According to the tool, the Walmart website recorded a 4.9% monthly decline in global visits in April compared to March. Yet, year-to-date, Walmart website traffic increased 2.58% compared to the previous year.

TipRanks’ website traffic tool acted as a timely precursor to Walmart’s mixed quarterly results, with year-to-date traffic on the company’s website rising. Still, sequentially, the same witnessed a decline.

Conclusion

The prevailing high inflationary environment coupled with supply chain issues dented Walmart’s results somewhat. Yet, top-line growth from the previous year remains a silver lining for the company.

Learn more about the Website Traffic tool in this video by Youtube sensation Tom Nash.

Read full Disclaimer & Disclosure

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