Wal-Mart (WMT) Stock Gains on 1Q Earnings, Revenue Beat

Shares of Wal-Mart Stores Inc. were trading up +4.85 or +7.68 percent to $68.00 per share in Thursday’s premarket after the company beat earnings expectations for the company’s first quarter of its fiscal 2017 year. Wal-Mart Stores stock closed at $63.15, down -1.95 or -3.00 percent in Wednesday’s regular trading session.

Stock Analysis

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 11,527 stores under 63 banners in 28 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. Wal-mart had revenue of $482.1 billion in its fiscal 2016 year.

For the company’s first fiscal quarter of 2017 ended on April 30th, Wal-Mart reported earnings of $0.98 per share compared to $1.03 per share in the same period one year ago. First quarter revenue came to $115.9 billion versus $114.83 billion in 2016’s first quarter, on a constant currency basis, revenue was $119.4 billion, a 4 percent increase over last year’s first quarter. Analysts expected the company to report earnings of $0.88 per share on revenue of $113.2 billion.

In an interview with CNBC, Wal-Mart Chief Financial Officer Brett Biggs said that “Several things (are) working for the consumer: fuel prices, unemployment and interest rates still low. But there is an air of uncertainty that is likely keeping the consumer from being as bullish as they would like to be,” Adding that, “E-commerce growth of 7 percent in constant currency isn't the growth rate we would like in that side of the business, but we continue to make foundational progress.”

Walmart U.S reported comparable store sales were up +1.0 percent in the quarter, its seventh consecutive increase. Neighborhood comparable sales were up +7.1 percent, both driven by a +1.5 percent increase in positive traffic. Net sales for the quarter came to $28.1 billion, on a constant currency basis, net sales were $31.6 billion, up +4.3 percent over last year’s first quarter, while operating income rose +22 percent.

Wal-Mart has been taking steps to compete with Amazon.com's (AMZN) two day delivery. The company announced last week it was reducing its free shipping pilot program delivery time from 3 days to 2 days and reducing the membership price by $1 to $49 per year. Amazon charges $99 per year, but comes with a variety of extra perks.

Wal-Mart has outperformed most other retailers in the first quarter and the difference is being reflected in its stock price. This morning’s premarket action shows renewed confidence in the stock, which has declined over 17 percent in the last twelve months, but is up 3 percent so far this year.

Other News About WMT

Here's The Country Where Walmart Is Performing The Worst

Same store sales declined -5.7 percent in this country compared to increases elsewhere.

Walmart is disappointed with one of its fastest growing businesses

Despite a 7 percent rate of growth last quarter, e-commerce is still not growing fast enough for the company.

Other Stocks in the News

Target is the latest retailer to feel the ‘Amazon effect’

Target stock closed down -8 percent yesterday.

Dean Foods ex-chairman, pro gambler charged with insider trading

Alleged insider trading charges stem from trades made between 2008 and 2014 in Dean Foods and Darden Restaurants.

Published on May 19, 2016
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.

Posted in ...