Walmart: Here’s Your Chance to Get in Cheaper in 2024
Walmart Inc. (NYSE: WMT) is a retail behemoth with more than 10,600 stores worldwide in over 27 countries, accommodating nearly 255 million customers weekly. Walmart is the world’s largest employer, with 2.1 million workers worldwide. It’s the largest consumer discretionary sector company and the largest employer in the United States, with 1.6 million employees. Walmart is the largest grocery store chain in the United States, followed by Costco Wholesale Co. (NASDAQ: COST) and Kroger Co. (NYSE: KR). It’s also the largest importer in the country, enjoying the benefits of a strong dollar. The stock rose to a high in the $180s before a 3-for-1 split occurred on February 26, 2024. Now that shares are a third of where they were trading before February 26, 2024, is now a good time to step into Walmart stock?
Despite Walmart’s unprecedented size, sales keep growing year after year, growing north of half a trillion dollars in 2023. In fiscal Q4 2024, Walmart generated EPS of $1.80 versus $1.64, a 10% beat. Revenues rose 5.7% YoY to $173.4 billion vs $170.85 billion. Consolidated gross margin is expected to rise 39 bps due to improvement at Walmart U.S. Global e-commerce sales rising 23% YoY. U.S. comps without fuel rose 3.9%. Its annual cash dividend was raised 9% to 83 cents per share on a post-stock split basis or $2.49 per share pre-split.
Raising the Bar
Walmart guided for fiscal Q1 2025 EPS of $1.46 to $1.56 versus $1.60 consensus analyst estimates. Q1 2024 revenues are expected to grow 4% to 5% YoY to $158 billion to $160 billion versus $157.27 billion. Fiscal full-year 2025 EPS is expected to be between $6.70 to $7.12 versus $7.06 consensus estimates. Fiscal full-year 2025 revenues are expected to grow 3% to 4% YoY to $667.6 billion to $674.1 billion versus $666.93 billion.
Walmart noted the higher transaction counts and unit volume drove market share gains in the United States and internationally. Walmart surpassed over $100 billion in international sales in 2023. During the 2023 calendar year holiday season, Walmart had two record-breaking volume days heading into Christmas. Store-fulfilled delivery sales rose 50% YoY. Upper-income households contributed to share gains through delivery as a source. Sam’s Club membership warehouses had 3.1% comp sales growth, excluding fuel, with strength in consumables, health categories and food.
Despite economic uncertainty, Walmart continues to see resiliency with its customers, who are finding value in apparel and hardlines. Prices are lower YoY with food items including apples, eggs and deli snacks but higher in asparagus and blackberries. Its private label penetration, like Target Co. (NYSE: TGT), is up strong in many countries. Walmart plans to remodel 928 stores and clubs worldwide over the next year, including 650 locations in the United States.
Walmart CEO Doug McMillon commented, “Our team delivered a great quarter, finishing off a strong year. We crossed $100 billion in eCommerce sales and drove share gains as our customer experience metrics improved, even during our highest volume days leading up to the holidays. We’re proud of the team and excited about building on our momentum as we work to bring prices down for our customers and members.”
VIZIO Acquisition Announced
In an unexpected move, Walmart announced its acquisition of smart TV manufacturer VIZIO Holding Co. (NYSE: VZIO). Walmart will acquire its proprietary SmartCast operating system (O/S) and 18 million active accounts. Walmart will pay $11.50 per share in cash or $2.3 billion in an all-cash deal. This move further collapsed streaming OS and smart TV maker Roku Inc. (NASDAQ: ROKU). Walmart’s massive distribution channel can breathe new life into Vizio sales and help boost Walmart’s high-margin ad business through its SmartCast OS, which enables users to stream ad-support TV content. Walmart’s ad business grew 33%, including 22% from Walmart Connect in fiscal Q4 2024.
The daily candlestick chart for WMT illustrates the rising wedge pattern. This pattern is typically a reversal pattern as the channel of higher highs and higher lows gets tighter until shares trigger a strong pullback. The daily relative strength index (RSI) is starting to fall back under the overbought 70 band. Pullback support levels are at $58.00, $56.25, $53.29 and $50.52.
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