BENTONVILLE - Walmart (NYSE:WMT) Inc. experienced a decline in stock price today, despite reporting third-quarter earnings that surpassed analysts' expectations. The Arkansas-based retail giant revealed a notable rebound in net income for Q3, with $453 million or 17 cents per share, a stark contrast to the loss of $1.8 billion or 66 cents per share it suffered in the same period last year.
The company's adjusted earnings reached $1.53 per share, edging out the FactSet consensus. Revenue also saw an impressive increase of 5.2% to $160.8 billion, again beating FactSet's projected figures. This growth was propelled by a strong performance in the U.S., where same-store sales grew by 4.9%. E-commerce sales contributed significantly to this success with a 24% surge, while the average transaction and ticket size rose by 3.4% and 1.5%, respectively.
Internationally, Walmart Mexico (Walmex), and China led the way in sales growth, although international e-commerce sales saw a slight decline of 3%. Advertising revenue grew by 4%. Additionally, Sam’s Club U.S. reported a sales increase of 2.8% to $22.0 billion, with food, consumables, and healthcare sectors driving this rise.
Despite these positive indicators, Walmart's stock suffered a 7.3% drop today due to concerns over its forecast for the upcoming year. CEO Doug McMillon acknowledged an early start to the holiday season and mentioned that the company has raised its full-year guidance. However, Walmart now anticipates an adjusted EPS of $6.40 to $6.48 for the year, which falls short of the FactSet consensus.
The retailer also expects sales growth to range between 5% to 5.5%, aligning closely with but not exceeding FactSet's growth expectations of 5%. In comparison to broader market trends, while the S&P 500 has seen a gain of 17% year to date, Walmart's shares have risen approximately 20% over the same period.
InvestingPro Insights
To enrich the discussion around Walmart's financial performance and future outlook, it's worth considering some key metrics and insights from InvestingPro.
Firstly, Walmart's market capitalization stands at a hefty 456.97B USD, reinforcing its position as a retail giant. The company's P/E ratio is 32.57, suggesting that investors are willing to pay a higher price for its earnings.
Secondly, with a revenue growth of 7.31% over the last twelve months as of Q2 2024, Walmart has demonstrated its ability to increase sales and generate profits consistently. This is reflected in its gross profit margin of 24.2% over the same period.
Two InvestingPro Tips that might be of interest to investors are:
1. Walmart yields a high return on invested capital, indicating efficient use of its resources to generate profits.
2. The company has a solid track record of maintaining dividend payments, having done so for 51 consecutive years. This consistency could be appealing to income-focused investors.
For more in-depth analysis and additional tips, consider exploring InvestingPro's offerings. With 14 more tips related to Walmart alone, it's a valuable resource for any investor looking to make informed decisions.
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