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Before the opening bell yesterday, Walmart (WMT - Free Report) reported mixed fourth-quarter 2021 results, wherein it missed earnings estimates but beat on revenues. In fact, the mega retailer posted record revenues driven by strong e-commerce sales. However, Walmart projects a slowdown in sales and profits for fiscal 2022, which has dampened investors’ mood. As such, the stock lost 6.5% at the close of the trading session on Feb 18.
Earnings per share came in at $1.39, missing the Zacks Consensus Estimate of $1.51 but improving 0.7% from the year-ago figure of $1.38. Revenues increased 7.3% year over year to a record $152.1 billion and topped the consensus mark of $148.5 billion.
U.S. comparable sales jumped 8.6% on strength across key categories, including general merchandise, health & wellness and grocery. An early start to the holiday season and a boost from stimulus money late in the fourth quarter propped up demand for electronics, toys and groceries. E-commerce sales surged 69% driven by strengthening online presence during the pandemic to attract new customers looking for a one-stop shop for their daily needs (read: Power-packed ETFs for Your Portfolio in 2021).
The world's biggest retailer expects net sales to grow in the low single digits in fiscal 2022 and earnings per share to be flat to slightly up. U.S. comparable sales are expected to grow in the low-single-digits this fiscal year. The company also projects billions of additional spending on worker salaries, automation and other technology that could weigh on its profitability.
ETFs in Focus
ETFs having the highest allocation to the world's largest brick-and-mortar retailer have been in focus following the results. Below we have highlighted five of them:
This fund manages a $5.4 billion asset base and has exposure to a basket of 96 consumer stocks by tracking the MSCI US Investable Market Consumer Staples 25/50 Index. It charges a fee of 10 basis points (bps) per year and trades in a good volume of around 135,000 shares per day on average. Here, Walmart occupies the second position in the basket with 9.1% allocation. The product is widely spread across household products, soft drinks, packaged foods & meat, and hypermarkets & supercenters that make up for a double-digit allocation each. The fund has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Will ETFs Gain as US Consumer Confidence Improves in January?).
Fidelity MSCI Consumer Staples Index ETF (FSTA - Free Report)
This fund tracks the MSCI USA IMI Consumer Staples Index, holding 99 stocks in its basket. Out of these, Walmart takes the second spot with 8.9% share. The ETF is widely diversified across beverages, household products, food and staples retailing, and food products. It has amassed $841.2 million in its asset base, while trading in a moderate volume of around 144,000 shares a day, on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #3 with a Medium risk outlook (read: Coke, PepsiCo Earnings Should Help Staples ETFs).
This fund provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index. Of these, WMT occupies the third position in the basket with 8.8% share. The product has amassed $206.2 million in its asset base and charges 35 bps in annual fees. Volume is light as it exchanges nearly 15,000 shares per day. RTH has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Consumer Staples Select Sector SPDR Fund (XLP - Free Report)
This is the most popular consumer staples ETF with AUM of $10.7 billion and follows the Consumer Staples Select Sector Index. The fund charges 12 bps in fees per year from investors and trades in heavy volume of nearly 9.5 million shares a day. In total, the fund holds about 32 securities in its basket with Walmart taking the second spot at 7.4%. From a sector perspective, household products take the largest share at 24.7% while beverages, food and staples retailing, and food products account for a double-digit allocation each. XLP has a Zacks ETF Rank #3 with a Medium risk outlook (see: all Consumer Staples ETFs here).
First Trust Nasdaq Retail ETF
The fund follows the Nasdaq US Smart Retail Index and holds 51 stocks in its basket. WMT takes the fourth spot with 6.7% of the assets. FTXD has accumulated $7.8 million in its asset base and has an expense ratio of 0.60%. It trades in an average daily volume of 4,000 shares and has a Zacks ETF Rank #3.
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Walmart Q4 Earnings Disappoint: ETFs in Focus
Before the opening bell yesterday, Walmart (WMT - Free Report) reported mixed fourth-quarter 2021 results, wherein it missed earnings estimates but beat on revenues. In fact, the mega retailer posted record revenues driven by strong e-commerce sales. However, Walmart projects a slowdown in sales and profits for fiscal 2022, which has dampened investors’ mood. As such, the stock lost 6.5% at the close of the trading session on Feb 18.
Earnings per share came in at $1.39, missing the Zacks Consensus Estimate of $1.51 but improving 0.7% from the year-ago figure of $1.38. Revenues increased 7.3% year over year to a record $152.1 billion and topped the consensus mark of $148.5 billion.
U.S. comparable sales jumped 8.6% on strength across key categories, including general merchandise, health & wellness and grocery. An early start to the holiday season and a boost from stimulus money late in the fourth quarter propped up demand for electronics, toys and groceries. E-commerce sales surged 69% driven by strengthening online presence during the pandemic to attract new customers looking for a one-stop shop for their daily needs (read: Power-packed ETFs for Your Portfolio in 2021).
The world's biggest retailer expects net sales to grow in the low single digits in fiscal 2022 and earnings per share to be flat to slightly up. U.S. comparable sales are expected to grow in the low-single-digits this fiscal year. The company also projects billions of additional spending on worker salaries, automation and other technology that could weigh on its profitability.
ETFs in Focus
ETFs having the highest allocation to the world's largest brick-and-mortar retailer have been in focus following the results. Below we have highlighted five of them:
Vanguard Consumer Staples ETF (VDC - Free Report)
This fund manages a $5.4 billion asset base and has exposure to a basket of 96 consumer stocks by tracking the MSCI US Investable Market Consumer Staples 25/50 Index. It charges a fee of 10 basis points (bps) per year and trades in a good volume of around 135,000 shares per day on average. Here, Walmart occupies the second position in the basket with 9.1% allocation. The product is widely spread across household products, soft drinks, packaged foods & meat, and hypermarkets & supercenters that make up for a double-digit allocation each. The fund has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Will ETFs Gain as US Consumer Confidence Improves in January?).
Fidelity MSCI Consumer Staples Index ETF (FSTA - Free Report)
This fund tracks the MSCI USA IMI Consumer Staples Index, holding 99 stocks in its basket. Out of these, Walmart takes the second spot with 8.9% share. The ETF is widely diversified across beverages, household products, food and staples retailing, and food products. It has amassed $841.2 million in its asset base, while trading in a moderate volume of around 144,000 shares a day, on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #3 with a Medium risk outlook (read: Coke, PepsiCo Earnings Should Help Staples ETFs).
VanEck Vectors Retail ETF (RTH - Free Report)
This fund provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index. Of these, WMT occupies the third position in the basket with 8.8% share. The product has amassed $206.2 million in its asset base and charges 35 bps in annual fees. Volume is light as it exchanges nearly 15,000 shares per day. RTH has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Consumer Staples Select Sector SPDR Fund (XLP - Free Report)
This is the most popular consumer staples ETF with AUM of $10.7 billion and follows the Consumer Staples Select Sector Index. The fund charges 12 bps in fees per year from investors and trades in heavy volume of nearly 9.5 million shares a day. In total, the fund holds about 32 securities in its basket with Walmart taking the second spot at 7.4%. From a sector perspective, household products take the largest share at 24.7% while beverages, food and staples retailing, and food products account for a double-digit allocation each. XLP has a Zacks ETF Rank #3 with a Medium risk outlook (see: all Consumer Staples ETFs here).
First Trust Nasdaq Retail ETF
The fund follows the Nasdaq US Smart Retail Index and holds 51 stocks in its basket. WMT takes the fourth spot with 6.7% of the assets. FTXD has accumulated $7.8 million in its asset base and has an expense ratio of 0.60%. It trades in an average daily volume of 4,000 shares and has a Zacks ETF Rank #3.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>