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Category: Stock Market and Walmart
Date: 25 August 2019 Stock Price: $110.83 We take a look at the latest financial results of retail group, Walmart for their 2nd quarter 2020 financial year.
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About Walmart
What started small, with a single discount store and the simple idea of selling more for less, has grown over the last 50 years into the largest retailer in the world. Each week, nearly 265 million customers and members visit our more than 11,200 stores under 55 banners in 27 countries and eCommerce websites in 10 countries. With fiscal year 2018 revenue of $500.3 billion, Walmart employs over 2.2 million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy and employment opportunity. It’s all part of our unwavering commitment to creating opportunities and bringing value to customers and communities around the world.
From our humble beginnings as a small discount retailer in Rogers, Ark., Walmart has opened thousands of stores in the U.S. and expanded internationally. Through innovation, we're creating a seamless experience to let customers shop anytime and anywhere online, through mobile devices and in stores. We are creating opportunities and bringing value to customers and communities around the globe. Walmart operates over 11,200 stores under 55 banners in 27 countries and eCommerce websites in 10 countries. We employ approximately 2.2 million associates around the world — 1.5 million in the U.S. alone.
Around the world, we help families save money so they can live better. We use our size and scale to provide access to high-quality goods and fresh, nutritious food at everyday low prices—while creating opportunities for our associates and small and medium-sized global suppliers. Led by President & CEO Judith McKenna, Walmart International has more than 5,900 retail units, operating outside the United States with 55 banners in 26 countries with more than 700,000 associates serving more than 100 million customers every week. Read more about how we operate around the world. Learn about some of our most important social, environmental and company initiatives within each market we serve, as we bring value to customers and communities in our Environmental, Social & Governance Report.
From our humble beginnings as a small discount retailer in Rogers, Ark., Walmart has opened thousands of stores in the U.S. and expanded internationally. Through innovation, we're creating a seamless experience to let customers shop anytime and anywhere online, through mobile devices and in stores. We are creating opportunities and bringing value to customers and communities around the globe. Walmart operates over 11,200 stores under 55 banners in 27 countries and eCommerce websites in 10 countries. We employ approximately 2.2 million associates around the world — 1.5 million in the U.S. alone.
Around the world, we help families save money so they can live better. We use our size and scale to provide access to high-quality goods and fresh, nutritious food at everyday low prices—while creating opportunities for our associates and small and medium-sized global suppliers. Led by President & CEO Judith McKenna, Walmart International has more than 5,900 retail units, operating outside the United States with 55 banners in 26 countries with more than 700,000 associates serving more than 100 million customers every week. Read more about how we operate around the world. Learn about some of our most important social, environmental and company initiatives within each market we serve, as we bring value to customers and communities in our Environmental, Social & Governance Report.
Financial overview of Walmart's latest results
Highlights from the release:
Numbers we are interested in: (for the quarter)
- Total revenue was $130.4 billion, an increase of $2.3 billion, or 1.8%. Excluding currency 2 , total revenue was $131.7 billion, an increase of $3.7 billion, or 2.9%.
- Walmart U.S. comp sales increased on a two-year stacked basis by 7.3%, which is the strongest growth in more than 10 years. Segment operating income increased 4%, marking the fifth consecutive quarter of growth.
- Walmart U.S. eCommerce sales growth of 37% includes strong growth in online grocery.
- Sam's Club comp sales1 increased 1.2%, and eCommerce sales grew 35%. Reduced tobacco sales negatively affected comp sales by 300 basis points.
- Net sales at Walmart International were $29.1 billion, a decrease of 1.1%. Excluding currency 2 , net sales were $30.4 billion, an increase of 3.3%. Strength in Walmex and China were offset by softness in the U.K. and Canada.
- Operating income declined 2.9%, or 2.4% in constant currency , which was better than planned with strong results in the U.S. businesses. As expected, the inclusion of Flipkart this quarter negatively affected profit results.
- Adjusted EPS excludes an unrealized loss, net of tax, of $0.01 on the company's equity investment in JD.com for the second quarter of FY20.
- FY20 adjusted EPS is now expected to range between a slight decrease and a slight increase compared with FY19 adjusted EPS .
- Walmart U.S. surpassed 1,100 grocery delivery locations and has more than 2,700 pickup locations. The company's NextDay delivery service from Walmart.com now covers about 75% of the U.S. population.
Numbers we are interested in: (for the quarter)
- Revenue: $130.4 billion (up 1.8% from $128.0 billion for the same quarter of the previous year)
- Revenue (constant currency): $131.7 billion (up 2.9% from $128.0 billion for the same quarter of the previous year)
- Operating income: $5.6 billion (down -2.9% from $5.8 billion for the same quarter of the previous year)
- Operating income (constant currency): $5.6 billion (down -2.4% from $5.8 billion for the same quarter of the previous year)
- Diluted net income (loss) per common share attributable to Walmart: $ 1.26
- Diluted weighted number of shares outstanding: 2.869 billion
- Receivables, net: $5.382 billion (up from $5.002 billion for the same quarter of the previous year)
- Inventories: $44.134billion (up from $41.985 billion for the sane quarter of the previous year)
- Total equity: $77.131 billion
- Net asset value per share: $26.83
- Trading at 4.1 times book value
- Net cash provided by operating activities: $11.185 billion
- Net cash provided by operating activities per share: $3.89
- Cash and cash equivalents: $ 9.283 billion
- Cash and cash equivalents per share: $3.23
- PE ratio: 22 (assuming earnings achieved in this quarter is carried on for a full financial year)
Walmart (NYSE:WMT) management commentary on the results and earnings guidance
"From a performance point of view, we're pleased with the strength we see in the business. Customers are responding to the improvements we're making, the productivity loop is working, and we're gaining market share. We're on track to exceed our original earnings expectations for the year, and that's possible because of the work our associates do every day." Doug McMillon President and CEO
Turning to our business results, we continue to have momentum, especially in the U.S. We thank our associates for their focus, speed and adaptability in this everchanging environment. We’re favorably positioned as we leverage our expansive Supercenter network to deliver a robust omnichannel experience. More than ever, we’re innovating across the business. We’re experimenting with emerging technologies to improve store operations and reduce friction in our customers’ lives. The initiatives we have underway provide extended access to our brand and position the company to earn a greater share of our customers’ wallet over time.
For the quarter, disruptive weather in parts of the U.S. negatively affected comp sales early on, yet we saw significant improvement in comps as the quarter progressed and weather turned more favorable. On a consolidated basis, we had good topline growth in constant currency, and along with productivity gains and cost controls, we were able to leverage operating expenses by 23 basis points. Adjusted EPS was $1.27, a slight decline versus a $1.29 last year but stronger than we anticipated. You’ll hear more from Brett regarding our updated guidance for the year but let me say that I’m pleased with what we’ve accomplished so far, and I’m excited about what’s still to come as we look to the back half of the year. Early in the quarter we hosted our annual Associate Celebration and Shareholders’ Meeting here in Northwest Arkansas. You could feel the energy from the more than 6,000 associates who joined us from all over the world. It’s one of my favorite times of the year. Not only do associates come together to learn and take back new ideas to their store, but I always appreciate how much I learn from spending time with these extraordinary people. At Walmart, we’re delivering solutions for customers that make shopping with us easier and allows them to add time back in their day. As we move towards a singular experience that’s seamless, we need to better align many of the functions that directly or indirectly affect our customers.
We had solid top-line growth as total constant currency revenue grew 2.9 percent to $131.7 billion, with currency having a negative effect of approximately $1.3 billion. Both Walmart U.S. and Sam’s Club delivered strong sales growth and Walmart International’s overall sales were solid despite some softness in certain markets including the U.K. and Canada. Consolidated gross profit margin declined 46 basis points on both a reported and constant currency basis. While the inclusion of Flipkart in this year’s results contributed to the decline, we also continue to make strategic price investments in various markets, including the U.S., which pressured year-over-year comparisons. Walmart U.S. gross margin was down 22 basis points
Turning to our business results, we continue to have momentum, especially in the U.S. We thank our associates for their focus, speed and adaptability in this everchanging environment. We’re favorably positioned as we leverage our expansive Supercenter network to deliver a robust omnichannel experience. More than ever, we’re innovating across the business. We’re experimenting with emerging technologies to improve store operations and reduce friction in our customers’ lives. The initiatives we have underway provide extended access to our brand and position the company to earn a greater share of our customers’ wallet over time.
For the quarter, disruptive weather in parts of the U.S. negatively affected comp sales early on, yet we saw significant improvement in comps as the quarter progressed and weather turned more favorable. On a consolidated basis, we had good topline growth in constant currency, and along with productivity gains and cost controls, we were able to leverage operating expenses by 23 basis points. Adjusted EPS was $1.27, a slight decline versus a $1.29 last year but stronger than we anticipated. You’ll hear more from Brett regarding our updated guidance for the year but let me say that I’m pleased with what we’ve accomplished so far, and I’m excited about what’s still to come as we look to the back half of the year. Early in the quarter we hosted our annual Associate Celebration and Shareholders’ Meeting here in Northwest Arkansas. You could feel the energy from the more than 6,000 associates who joined us from all over the world. It’s one of my favorite times of the year. Not only do associates come together to learn and take back new ideas to their store, but I always appreciate how much I learn from spending time with these extraordinary people. At Walmart, we’re delivering solutions for customers that make shopping with us easier and allows them to add time back in their day. As we move towards a singular experience that’s seamless, we need to better align many of the functions that directly or indirectly affect our customers.
We had solid top-line growth as total constant currency revenue grew 2.9 percent to $131.7 billion, with currency having a negative effect of approximately $1.3 billion. Both Walmart U.S. and Sam’s Club delivered strong sales growth and Walmart International’s overall sales were solid despite some softness in certain markets including the U.K. and Canada. Consolidated gross profit margin declined 46 basis points on both a reported and constant currency basis. While the inclusion of Flipkart in this year’s results contributed to the decline, we also continue to make strategic price investments in various markets, including the U.S., which pressured year-over-year comparisons. Walmart U.S. gross margin was down 22 basis points
Walmart (NYSE:WMT) stock price history
The image below o shows the stock price history of Walmart (NYSE:WMT) for the last 5 years.Its been a pretty solid run for Walmart shares over the last 5 years, witht stock having gone up from just over $60 a share 5 years ago to the $110 a stock its trading at right now.
Walmart (NYSE:WMT) stock valuation
So what do we believe Walmart shares are worth? Based on their latest financial results and their earnings guidance we value Walmart stock at $101.20 a share. A concern when looking at the group's latest results is the sharp increase in their inventories compared to the same quarter of the previous year. A close eye will have to be kept on the inventories in order to see if it keeps building up. If it does it shows that Walmart is struggling to move stock.