Wal-Mart (WMT) Stock Higher on Earnings, Guidance

Shares of Wal-Mart Stores Inc. (WMT) were trading up +1.14 or +1.97 percent to $59.01 in Tuesday’s premarket after the company reported better than expected earnings and revenue for its fiscal third quarter of 2016. In addition, Walmart narrowed its guidance for the fourth quarter and full year. Wal-Mart stock closed at $57.87, up +1.45 or +2.57 percent in Monday’s regular trading session.

Bentonville, Arkansas based Wal-Mart Stores Inc. also known as Walmart, was founded by Sam Walton in 1962 and incorporated in 1969.
The company runs a total of 11,489 stores under 72 banners in 27 countries with e-commerce sites in 11 countries. Walmart is the largest company in the world by revenue and the world’s largest private employer, with more than 2.2 million employees. The company is half owned by the Walton Family, which retains ownership of 50 percent of the company through the Walton Enterprises holding company. As of 2009, the company is the largest grocery dealer in the United States with 51 percent of its U.S. sales from its grocery business.

Walmart reported earnings per share of $1.03 including +$0.04 from certain lease adjustments, while the company had a negative currency impact of -$0.04. Total revenue came to $117.4 billion or $122.4 billion on a constant currency basis. This compares to earnings per share of $1.15 on $119 billion in revenue in the same period one year ago. The analyst consensus was for the company to report earnings of $0.98 on $117.8 billion in revenue.

Comparable store sales at the company’s U.S. stores were up +1.5 percent, its fifth consecutive quarterly increase, versus +0.5 in the same quarter last year, while traffic increased +1.7%. Neighborhood Market comparable store sales were up +8 percent with strong growth from new stores.

The company’s international net sales were $29.8 billion or $34.7 billion on a constant currency basis, while operating income fell -6.4 percent. Nevertheless, on a constant currency basis, operating income increased +8.5 percent.

Doug McMillon, President and Chief Executive Officer of the company said in a press release that, “We're pleased with the continued sales growth in Walmart U.S. and in our international business. Strong traffic and our fifth consecutive quarter of positive comps in Walmart U.S. stores show we are taking the right steps to win with customers. Although we still have work to do, we are positioning for sustainable growth through investments in people and technology to deliver a seamless shopping experience at scale.”

For the full year, Walmart narrowed its guidance for earnings per share from a range of $4.40 to $4.70 to a new range of $4.50 to $4.65. Analysts had expected full year earnings per share of $4.51. For the fourth quarter, the company forecast earnings of $1.40 to $1.55 compared to a previous range of $0.93 to $1.05, while expecting flat total sales growth. The new estimate includes a currency exchange negative headwind of $0.16 per share versus a previous forecast of $0.15 per share in the third quarter. Today’s earnings report could mark a turnaround for the company, especially if Walmart has a significantly better fourth quarter and holiday season.

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Published on Nov 17, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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