We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Wal-Mart (WMT) Down 2% Since Earnings Report: Can It Rebound?
Read MoreHide Full Article
A month has gone by since the last earnings report for Wal-Mart Stores, Inc. (WMT - Free Report) . Shares have lost about 2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Wal-Mart Fourth-Quarter Earnings, Revenues Beat on Strong Comps
Wal-Mart reported better-than-expected fourth-quarter fiscal 2017 results, wherein both earnings and revenues exceeded the Zacks Consensus Estimate driven by higher comparable store sales (comps).
Wal-Mart’s fourth-quarter fiscal 2017 adjusted earnings (excluding discontinued real estate projects and severance costs of $0.08 per share) of $1.30 per share beat the Zacks Consensus Estimate of $1.29 by 0.8% on higher comps. However, the figure declined 12.8% from the year-ago adjusted earnings of $1.49 per share. Though the company reported higher comps, unfavorable currency and higher investments in wages and e-commerce activities resulted in the year-over-year fall in earnings.
Quarter in Detail
Total revenue came in at $130.9 billion (including membership and other income). The figure beat the Zacks Consensus Estimate of $130.6 billion by 0.23% and increased 1.0% year over year. Currency dampened sales by approximately $2.65 billion. The decline in the International business was more than offset by growth in sales at Wal-Mart U.S and Sam’s Club divisions.
On a constant currency basis, revenues improved 3.0% to $133.6 billion. e-commerce sales increased approximately 29.0% at Wal-Mart U.S. However, e-commerce growth was higher than the preceding quarter’s improvement of 20.6%.
Total revenue comprised net sales of $129.8 billion (up 0.8% from the year-ago quarter and up 2.9% on a constant currency basis) and membership and other income of $1.2 billion (up 20.7% year over year).
Operating income declined 6.6% to $6.21 billion in the reported quarter as the company continued to invest in people and technology. Higher investment in e-commerce initiatives to compete with the online retailer Amazon.com and in associates through higher wages and training seem to have dampened the operating income. The negative currency also had an impact on the same. On a constant currency basis, operating income decreased 3.4%.
Segment Details
Wal-Mart U.S.: The segment posted net sales growth of 2.8% to $83.7 billion in the reported quarter, including the impact of fuel sales. Operating income, however, declined 2.5% to $4.9 billion, as the company incurred huge expenses as a result of e-commerce initiatives and higher wages and training.
U.S. same-store sales (comps) for the 13-week period ended Jan 27 increased 1.8% compared with 0.6% comps growth in the prior-year quarter. This was the 10th consecutive quarter of positive comps. Comp sales growth exceeded the company’s expectations of 1 - 1.5% increase. While comp traffic improved 1.4%, average ticket inched up 0.4% in the quarter. The impact of rising consumer spending was seen in improved traffic during the quarter.
Neighborhood Market comps also increased approximately 5.3%, with strong customer growth. E-commerce sales positively impacted comp sales in the quarter at Wal-Mart U.S. by 0.40%.
Wal-Mart International: Segment net sales, including fuel sales, declined 5.1% year over year to $31.0 billion. The same, however, increased 3.0% on a constant currency basis to $33.7 billion. Operating income declined 8.9% to $1.5 billion. On a constant currency basis, it grew 3.8%.
Sam’s Club: The segment, which comprises membership warehouse clubs, posted net sales growth, including fuel impact, of 3.0% to $15.0 billion. Sam’s Club operating income, however, decreased 8.5% to $390 million in the quarter.
Sam’s Club comps, excluding the impact of fuel sales, rose 2.4% compared with a decline of 0.5% in the prior-year quarter. Comp sales growth was better than the company’s expectations of 1 - 1.5% growth. Both comp traffic and ticket increased 1.2%. e-commerce sales positively impacted comps by approximately 0.8% in the quarter.
Fiscal 2017 Results
Adjusted earnings in fiscal 2017 were $4.32 per share, which beat the Zacks Consensus Estimate of $4.31 by 0.23%. However, the figure declined 5.9% from the year-ago adjusted earnings of $4.59 per share.
Total revenue came in at $485.9 billion (including membership and other income). The figure beat the Zacks Consensus Estimate of $485.1 billion by 0.16% and increased 0.8% year over year. Currency dampened sales by approximately $11.05 billion. On a constant currency basis, revenues grew 3.1% to $496.9 billion.
Other Financial Updates
Wal-Mart ended the quarter with cash and cash equivalents of $6.87 billion, total long-term debt of $36.0 billion, long-term capital lease obligations of $6.0 billion and shareholders’ equity of $80.5 billion.
At the end of fiscal 2017, Wal-Mart generated cash flow from operations of $31.5 billion and incurred capital expenditures of $10.6 billion, resulting in free cash flow of $20.9 billion.
Wal-Mart paid $6.2 billion in dividends during the fiscal year. The company repurchased about 120 million shares worth $8.3 billion in the fiscal year, with shares worth $9.2 billion remaining out of $20 billion authorized in Oct 2015.
Guidance
First-Quarter Fiscal 2018
Wal-Mart expects U.S. comp sales growth in the range of 1−1.5% for the 13-week period ending Apr 28. Sam’s Club comp sales, without the impact of fuel sales, are expected to increase around 1%. The company expects earnings in the range of $0.90 to $1.00 per share.
Fiscal 2018
The company expects its adjusted earnings in the range of $4.20−$4.40 per share, assuming full-year effective tax rate around 32%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, Wal-Mart's stock has a great Growth Score of 'A', though it is lagging a bit on the momentum front with a 'C'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the stock is suitable for value and growth investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Wal-Mart (WMT) Down 2% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Wal-Mart Stores, Inc. (WMT - Free Report) . Shares have lost about 2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Wal-Mart Fourth-Quarter Earnings, Revenues Beat on Strong Comps
Wal-Mart reported better-than-expected fourth-quarter fiscal 2017 results, wherein both earnings and revenues exceeded the Zacks Consensus Estimate driven by higher comparable store sales (comps).
Wal-Mart’s fourth-quarter fiscal 2017 adjusted earnings (excluding discontinued real estate projects and severance costs of $0.08 per share) of $1.30 per share beat the Zacks Consensus Estimate of $1.29 by 0.8% on higher comps. However, the figure declined 12.8% from the year-ago adjusted earnings of $1.49 per share. Though the company reported higher comps, unfavorable currency and higher investments in wages and e-commerce activities resulted in the year-over-year fall in earnings.
Quarter in Detail
Total revenue came in at $130.9 billion (including membership and other income). The figure beat the Zacks Consensus Estimate of $130.6 billion by 0.23% and increased 1.0% year over year. Currency dampened sales by approximately $2.65 billion. The decline in the International business was more than offset by growth in sales at Wal-Mart U.S and Sam’s Club divisions.
On a constant currency basis, revenues improved 3.0% to $133.6 billion. e-commerce sales increased approximately 29.0% at Wal-Mart U.S. However, e-commerce growth was higher than the preceding quarter’s improvement of 20.6%.
Total revenue comprised net sales of $129.8 billion (up 0.8% from the year-ago quarter and up 2.9% on a constant currency basis) and membership and other income of $1.2 billion (up 20.7% year over year).
Operating income declined 6.6% to $6.21 billion in the reported quarter as the company continued to invest in people and technology. Higher investment in e-commerce initiatives to compete with the online retailer Amazon.com and in associates through higher wages and training seem to have dampened the operating income. The negative currency also had an impact on the same. On a constant currency basis, operating income decreased 3.4%.
Segment Details
Wal-Mart U.S.: The segment posted net sales growth of 2.8% to $83.7 billion in the reported quarter, including the impact of fuel sales. Operating income, however, declined 2.5% to $4.9 billion, as the company incurred huge expenses as a result of e-commerce initiatives and higher wages and training.
U.S. same-store sales (comps) for the 13-week period ended Jan 27 increased 1.8% compared with 0.6% comps growth in the prior-year quarter. This was the 10th consecutive quarter of positive comps. Comp sales growth exceeded the company’s expectations of 1 - 1.5% increase. While comp traffic improved 1.4%, average ticket inched up 0.4% in the quarter. The impact of rising consumer spending was seen in improved traffic during the quarter.
Neighborhood Market comps also increased approximately 5.3%, with strong customer growth. E-commerce sales positively impacted comp sales in the quarter at Wal-Mart U.S. by 0.40%.
Wal-Mart International: Segment net sales, including fuel sales, declined 5.1% year over year to $31.0 billion. The same, however, increased 3.0% on a constant currency basis to $33.7 billion. Operating income declined 8.9% to $1.5 billion. On a constant currency basis, it grew 3.8%.
Sam’s Club: The segment, which comprises membership warehouse clubs, posted net sales growth, including fuel impact, of 3.0% to $15.0 billion. Sam’s Club operating income, however, decreased 8.5% to $390 million in the quarter.
Sam’s Club comps, excluding the impact of fuel sales, rose 2.4% compared with a decline of 0.5% in the prior-year quarter. Comp sales growth was better than the company’s expectations of 1 - 1.5% growth. Both comp traffic and ticket increased 1.2%. e-commerce sales positively impacted comps by approximately 0.8% in the quarter.
Fiscal 2017 Results
Adjusted earnings in fiscal 2017 were $4.32 per share, which beat the Zacks Consensus Estimate of $4.31 by 0.23%. However, the figure declined 5.9% from the year-ago adjusted earnings of $4.59 per share.
Total revenue came in at $485.9 billion (including membership and other income). The figure beat the Zacks Consensus Estimate of $485.1 billion by 0.16% and increased 0.8% year over year. Currency dampened sales by approximately $11.05 billion. On a constant currency basis, revenues grew 3.1% to $496.9 billion.
Other Financial Updates
Wal-Mart ended the quarter with cash and cash equivalents of $6.87 billion, total long-term debt of $36.0 billion, long-term capital lease obligations of $6.0 billion and shareholders’ equity of $80.5 billion.
At the end of fiscal 2017, Wal-Mart generated cash flow from operations of $31.5 billion and incurred capital expenditures of $10.6 billion, resulting in free cash flow of $20.9 billion.
Wal-Mart paid $6.2 billion in dividends during the fiscal year. The company repurchased about 120 million shares worth $8.3 billion in the fiscal year, with shares worth $9.2 billion remaining out of $20 billion authorized in Oct 2015.
Guidance
First-Quarter Fiscal 2018
Wal-Mart expects U.S. comp sales growth in the range of 1−1.5% for the 13-week period ending Apr 28. Sam’s Club comp sales, without the impact of fuel sales, are expected to increase around 1%. The company expects earnings in the range of $0.90 to $1.00 per share.
Fiscal 2018
The company expects its adjusted earnings in the range of $4.20−$4.40 per share, assuming full-year effective tax rate around 32%.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Wal-Mart Stores, Inc. Price and Consensus
Wal-Mart Stores, Inc. Price and Consensus | Wal-Mart Stores, Inc. Quote
VGM Scores
At this time, Wal-Mart's stock has a great Growth Score of 'A', though it is lagging a bit on the momentum front with a 'C'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the stock is suitable for value and growth investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.