Wal-Mart (WMT) Stock Loses Ground After Fourth Quarter Earnings Report
Shares of Wal-Mart Stores, Inc. (WMT: Charts, News) fell by -$2.41 or 3.86 percent to close at $60.07 per share on Tuesday after the company reported slightly worse than expected diluted earnings per share of $1.44 in its fourth quarter. This result was computed by subtracting the $0.07 per share that was attributed to gains from real estate sales and tax items from the $1.51 earnings per share the company originally reported.
The consensus of market analysts was anticipating a marginally better Q4 earnings result of $1.45 per share for Wal-Mart.
In terms of Wal-Mart's consolidated operating income, the Bentonville, Arkansas based retailer posted a respectable result of $8.4 billion for its fiscal fourth quarter that ended on January 31st. Its consolidated operating income for the year came in at $26.6 billion, with diluted earnings per share of $4.54 on a yearly basis.
Wal-Mart Stores, Inc.'s stock has rallied considerably over the last few years, trading in a notable upwards trend to reach the $62.57 level just last Friday, before dropping significantly during Tuesday's session to close at $60.07.
Taking into accounts its new earnings data, the company's stock currently trades at roughly 13.2 times earnings. This is slightly above Wal-Mart's competitor Target (TGT: Charts, News), but well below retailers like Costco (COST: Charts, News) and PriceSmart (PSMT: Charts, News) that have current P/E ratios of $25.4 and $33.4 respectively.
Furthermore, a closer analysis of Wal-Mart Stores' latest earnings and sales report reveals that the superstore operator saw its net sales rise by 5.8 percent to $122.3 billion in its fiscal fourth quarter, which concluded on January 31st. Nevertheless, analysts were concerned that this rise in sales was accompanied by a decline in the firm's margin, as it cut prices during the key pre-holiday period.
For the same period last year, the firm's net sales figure was $115.6 billion, and its result for the entire year was $435.1 billion, up 3.9 percent versus the prior year. Wal-Mart attributed $2.4 billion of its net sales improvement to its recent acquisition of the Netto stores in Great Britain and the Massmart stores in South Africa.
In addition, the company noted a $1 billion loss due to foreign exchange rate movements in its fourth quarter, although the yearly forex impact on its bottom line was an overall gain of $4 billion.
Mike Duke, the President and CEO of Wal-Mart Stores, said about his company's development overseas that, "Walmart International delivered strong growth through both comp store sales and a record number of new units, including the acquisitions of Netto and Massmart." He enthusiastically added that, "Today, every segment of our business is stronger than it was a year ago, and we're in a great position for fiscal year 2013."
Overall, while Wal-Mart's recent earnings results showed progress, the stock's price is bumping up against heavy resistance anticipated just ahead of the $64.00 level, with its all-time high of $70.25 not far above that. Despite the recent run up in the stock in early 2012, a correction or consolidation period seems overdue and is now likely to prevail over the near term, making the stock seem more of a hold - or even a short term sell - than a buy.
Other News About WMT
High-End Retailers Report Strong Profits, but Walmart Still Struggles
Stores targeting high income customers improve, while Wal-Mart's margin falls on price cuts.
Wal-Mart Holiday Price Cuts Hit Profits
Wal-Mart's price cutting during the key pre-holiday period hurt its Q4 results. Other Stocks in the News
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