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Walmart Smashes Q1 Earnings Estimates, Ups View: ETFs to Gain
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Before the opening bell yesterday, Walmart (WMT - Free Report) reported blowout first-quarter 2022 results, wherein it outpaced both earnings and revenue estimates. The mega retailer raised its full-year outlook on the reopening of economies, which is expected to boost demand.
Earnings per share came in at $1.69, surpassing the Zacks Consensus Estimate of $1.22 but improving from the year-ago earnings of $1.18. Revenues increased 2.7% year over year to $138.3 billion and topped the consensus mark of $131.3 billion. The robust performance was driven by growing e-commerce business, strong grocery sales and higher spending after multiple rounds of stimulus checks were distributed to most Americans (read: Retail ETFs in Focus Ahead of Big-Box Q1 Earnings).
U.S. comparable sales jumped 6% on strength across key categories, including apparel, recreation and home improvement products like outdoor living and sporting goods. E-commerce sales growth slowed down to 37% in the quarter from 69% in the prior quarter and 74% in the year-ago quarter. While the solid trend toward online shopping is expected to continue, demand at brick-and-mortar stores will also rise as more Americans get vaccinated and move freely. Walmart last week began allowing fully vaccinated people to shop without wearing masks, making it the first major retailer to walk back its mandatory mask policy.
The world's biggest retailer now expects earnings to increase in the high single digits compared to the previous expectation of a slight decline in profit for the year. Revenues are also projected to grow by low-tomid single digits compared to the previous forecast of low single digits.
ETFs in Focus
ETFs having the highest allocation to the world's largest brick-and-mortar retailer could see smooth trading following the results. Below we have highlighted five of them:
Consumer Staples Select Sector SPDR Fund (XLP - Free Report)
This is the most popular consumer staples ETF with AUM of $10.8 billion and follows the Consumer Staples Select Sector Index. The fund charges 12 bps in fees per year from investors and trades in a heavy volume of nearly 12 million shares a day. In total, the fund holds about 32 securities in its basket with Walmart taking the fourth spot at 9%. From a sector perspective, beverages and household products take the largest share with more than 24% each while, food and staples retailing, and food products account for a double-digit allocation each. XLP has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: 4 Sector ETFs & Stocks to Shine Despite Soft April Retail Sales).
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 8.4% share. The product has amassed $223.3 million in its asset base and charges 35 bps in annual fees. Volume is light as it exchanges nearly 39,000 shares per day. RTH has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
This fund manages a $5.7 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 bps per year and trades in a good volume of around 110,000 shares per day on average. Here, Walmart occupies the third position in the basket with 8% 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 with a Medium risk outlook (see: all Consumer Staples ETFs here).
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 third spot with 7.9% share. The ETF is widely diversified across beverages, food and staples retailing, household products, and food products. It has amassed $885 million in its asset base, while trading in a moderate volume of around 140,000 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.
First Trust Nasdaq Retail ETF
The fund follows the Nasdaq US Smart Retail Index and holds 50 stocks in its basket. WMT takes the fifth spot with 6% of the assets. FTXD has accumulated $8.1 million in its asset base and has an expense ratio of 0.60%. It trades in an average daily volume of 21,000 shares and has a Zacks ETF Rank #3.
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Walmart Smashes Q1 Earnings Estimates, Ups View: ETFs to Gain
Before the opening bell yesterday, Walmart (WMT - Free Report) reported blowout first-quarter 2022 results, wherein it outpaced both earnings and revenue estimates. The mega retailer raised its full-year outlook on the reopening of economies, which is expected to boost demand.
Earnings per share came in at $1.69, surpassing the Zacks Consensus Estimate of $1.22 but improving from the year-ago earnings of $1.18. Revenues increased 2.7% year over year to $138.3 billion and topped the consensus mark of $131.3 billion. The robust performance was driven by growing e-commerce business, strong grocery sales and higher spending after multiple rounds of stimulus checks were distributed to most Americans (read: Retail ETFs in Focus Ahead of Big-Box Q1 Earnings).
U.S. comparable sales jumped 6% on strength across key categories, including apparel, recreation and home improvement products like outdoor living and sporting goods. E-commerce sales growth slowed down to 37% in the quarter from 69% in the prior quarter and 74% in the year-ago quarter. While the solid trend toward online shopping is expected to continue, demand at brick-and-mortar stores will also rise as more Americans get vaccinated and move freely. Walmart last week began allowing fully vaccinated people to shop without wearing masks, making it the first major retailer to walk back its mandatory mask policy.
The world's biggest retailer now expects earnings to increase in the high single digits compared to the previous expectation of a slight decline in profit for the year. Revenues are also projected to grow by low-tomid single digits compared to the previous forecast of low single digits.
ETFs in Focus
ETFs having the highest allocation to the world's largest brick-and-mortar retailer could see smooth trading following the results. Below we have highlighted five of them:
Consumer Staples Select Sector SPDR Fund (XLP - Free Report)
This is the most popular consumer staples ETF with AUM of $10.8 billion and follows the Consumer Staples Select Sector Index. The fund charges 12 bps in fees per year from investors and trades in a heavy volume of nearly 12 million shares a day. In total, the fund holds about 32 securities in its basket with Walmart taking the fourth spot at 9%. From a sector perspective, beverages and household products take the largest share with more than 24% each while, food and staples retailing, and food products account for a double-digit allocation each. XLP has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: 4 Sector ETFs & Stocks to Shine Despite Soft April Retail Sales).
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 8.4% share. The product has amassed $223.3 million in its asset base and charges 35 bps in annual fees. Volume is light as it exchanges nearly 39,000 shares per day. RTH has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Vanguard Consumer Staples ETF (VDC - Free Report)
This fund manages a $5.7 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 bps per year and trades in a good volume of around 110,000 shares per day on average. Here, Walmart occupies the third position in the basket with 8% 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 with a Medium risk outlook (see: all Consumer Staples ETFs here).
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 third spot with 7.9% share. The ETF is widely diversified across beverages, food and staples retailing, household products, and food products. It has amassed $885 million in its asset base, while trading in a moderate volume of around 140,000 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.
First Trust Nasdaq Retail ETF
The fund follows the Nasdaq US Smart Retail Index and holds 50 stocks in its basket. WMT takes the fifth spot with 6% of the assets. FTXD has accumulated $8.1 million in its asset base and has an expense ratio of 0.60%. It trades in an average daily volume of 21,000 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 >>