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Category: Stock Market and Walmart (WMT)
Date: 18 August 2020 Stock Price of Walmart: $135.60 We take a look at the 2nd quarter 2021 earnings report of the world's largest bricks and mortar retail group, Walmart. Walmart employs roughly 2.2 million people and have over 11 200 stores across the globe. The group reported revenues of $137.7 billion and net income of $6.4 billion. Doesn't look like Covid-19 affected the group's earnings at all.
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I want to give a big thank you to our associates for their tireless efforts during these unprecedented times. We also appreciate the trust and confidence of our customers. We remain focused on serving them well now and expanding our set of global capabilities to serve them well in the future - Doug McMillon President and CEO, Walmart"
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.
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.
Overview of Walmart's 2nd quarter 2021 earnings release
The data below refers to the latest quarter unless specified otherwise
- Revenue: $134.622 billion (up from $122.949 billion for the same quarter of the previous year)
- Revenue increased by 8.6% over the last 12 months
- Cost of sales: $102.026 billion (up from $93.034 billion for the same quarter of the previous year)
- Cost of sales increased by 9.7% over the last 12 months.
- Margin squeeze being experienced by Walmart is the group's revenues increased at a slower rate than their cost of sales
- Net income: $3.990 billion (up from $3.842 billion for the same quarter of the previous year)
- Diluted income per share: $1.40 (up from $1.33 for the same quarter of the previous year)
- PE ratio of Walmart: 23.5
- Diluted weighted number of shares outstanding: 2.849 billion (down from 2.886 billion for the same quarter of the previous year)
- Cash and cash equivalents: $14.930 billion
- Cash and cash equivalents per share: $5.24
- Cash and cash equivalents makes up 3.9% of Walmart's market capital
- Cash and cash equivalents makes up 6.4% of Walmart's total assets
- Receivables, net: $5.029 billion
- Receivables makes up 2.2% of Walmart's total assets
- Inventories: $41.2 billion
- Inventories makes up 17.2% of Walmart's total assets
- Stockholders equity in Walmart: $74.110 billion
- Stockholders equity per share in Walmart: $26.01
- So Walmart is trading at 5.1 times its stockholders equity per share which is just outside the expected range of between 2 and 4 times that most firms tend to trade at
- For some perspective the average price to book value of firms in the S&P 500 is 3.7
- Cash generated from operations: $7.017billion
- Cash generated from operations per share : $2.46
Walmart (NYSE:WMT) management commentary on the results and earnings guidance
The company’s net sales and operating results were significantly affected by a continuation of the global health crisis. Increased demand for products across multiple categories led to strong top-line and gross margin results
“I want to give a big thank you to our associates for their tireless efforts during these unprecedented times. We also appreciate the trust and confidence of our customers. We remain focused on serving them well now and expanding our set of global capabilities to serve them well in the future.” Doug McMillon President and CEO, Walmart
“I want to give a big thank you to our associates for their tireless efforts during these unprecedented times. We also appreciate the trust and confidence of our customers. We remain focused on serving them well now and expanding our set of global capabilities to serve them well in the future.” Doug McMillon President and CEO, Walmart
Sam’s Club comp sales increased 13.3%. eCommerce sales grew 39%. Reduced tobacco sales negatively affected comp sales by approximately 390 basis points. Growth in membership income was the highest quarterly increase in more than five years. New member count increased more than 60%. Walmart International net sales were $27.2 billion, a decrease of 6.8%.
Changes in currency rates negatively affected net sales by approximately $2.4 billion. Excluding currency 2 , net sales would have been $29.6 billion, an increase of 1.6%. Net sales included the effects of the government-mandated closure of the company’s Flipkart business in India for a portion of the quarter, as well as similar actions in markets in Africa and Central America.
Consolidated gross profit rate increased 63 basis points primarily as a result of a shift in the mix of sales to higher-margin general merchandise categories, fewer markdowns and better margins on fuel, partially offset by the carryover of investments in price from last year. Spending associated with stimulus payments in the U.S. positively affected sales of general merchandise. Consolidated operating expenses as a percentage of net sales increased 42 basis points, primarily as a result of incremental expenses related to COVID-19, a business restructuring in the U.S. and a discrete tax item.
In total, these costs negatively affected expense leverage by about 130 basis points. Underlying productivity in stores and eCommerce remained strong. Consolidated operating income was $6.1 billion, an increase of 8.5%. Adjusted operating income in constant currency 2 increased 18.6% led by strength across all operating segments, including significantly lower losses in Walmart U.S. eCommerce.
Changes in currency rates negatively affected net sales by approximately $2.4 billion. Excluding currency 2 , net sales would have been $29.6 billion, an increase of 1.6%. Net sales included the effects of the government-mandated closure of the company’s Flipkart business in India for a portion of the quarter, as well as similar actions in markets in Africa and Central America.
Consolidated gross profit rate increased 63 basis points primarily as a result of a shift in the mix of sales to higher-margin general merchandise categories, fewer markdowns and better margins on fuel, partially offset by the carryover of investments in price from last year. Spending associated with stimulus payments in the U.S. positively affected sales of general merchandise. Consolidated operating expenses as a percentage of net sales increased 42 basis points, primarily as a result of incremental expenses related to COVID-19, a business restructuring in the U.S. and a discrete tax item.
In total, these costs negatively affected expense leverage by about 130 basis points. Underlying productivity in stores and eCommerce remained strong. Consolidated operating income was $6.1 billion, an increase of 8.5%. Adjusted operating income in constant currency 2 increased 18.6% led by strength across all operating segments, including significantly lower losses in Walmart U.S. eCommerce.
Walmart (NYSE:WMT) stock price history
The image below obtained from Google, 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. 5 years ago the stock of Walmart was trading at $66.50 and its currently trading at $135.60 a stock. That's a healthy 103.9% return provided to Walmart stockholders over the last 5 years.
Walmart's stock is trading at a lot closer to its 52 week high of $136.13 than it is to its 52 week low of $102 which to us is a clear indication that the short term sentiment and momentum of Walmart's stock is overwhelmingly positive at this point in time
Walmart's stock is trading at a lot closer to its 52 week high of $136.13 than it is to its 52 week low of $102 which to us is a clear indication that the short term sentiment and momentum of Walmart's stock is overwhelmingly positive at this point in time
Walmart (WMT) stock vs Costco (COST) stock performance over the last 5 years
The image below shows the stock price history of Costco (COST) and Walmart (WMT) over the last 5 years. These two companies are two of the biggest general retailers in the world. The summary below shows the stock price performance of the two giant retailers over the last 5 years (ranked from best to worst)
The stock of Costco has easily outperformed that of Walmart over the last 5 years
- Costco: 140.85%
- Walmart: 103.9%
The stock of Costco has easily outperformed that of Walmart over the last 5 years
Recent coverage of Walmart (WMT)
The extract below covers the latest regarding Walmart as obtained from Investors.com
Walmart (WMT) blew past second-quarter forecasts early Tuesday as the Dow Jones retail giant capitalizes on the pandemic shifts in consumer spending, but said sales have started to "normalize" as the coronavirus stimulus fades. WMT stock initially jumped early Tuesday, but erased gains after breaking out Monday.
Walmart Earnings Estimates: Wall Street expected Walmart earnings per share to slip 6% to $1.20, according to Zacks Investment Research. Revenue was seen rising 3% to $134.23 billion. Same-store sales, excluding gas and foreign exchange impact, were seen rising 6.2% overall, according to Consensus Metrix. They were expected to rise 6.4% at Walmart U.S. stores and 6.2% at Sam's Club outlets.
Read the full article here
Walmart (WMT) blew past second-quarter forecasts early Tuesday as the Dow Jones retail giant capitalizes on the pandemic shifts in consumer spending, but said sales have started to "normalize" as the coronavirus stimulus fades. WMT stock initially jumped early Tuesday, but erased gains after breaking out Monday.
Walmart Earnings Estimates: Wall Street expected Walmart earnings per share to slip 6% to $1.20, according to Zacks Investment Research. Revenue was seen rising 3% to $134.23 billion. Same-store sales, excluding gas and foreign exchange impact, were seen rising 6.2% overall, according to Consensus Metrix. They were expected to rise 6.4% at Walmart U.S. stores and 6.2% at Sam's Club outlets.
Read the full article here
Walmart (NYSE:WMT) stock valuation
So what do we believe Walmart stock is worth after their latest earnings report and their fiscal guidance provided? Based on their very strong 2nd quarter 2021 earnings report our valuation model provides a target price (full value price) for Walmart stock at $145.10 a stock .
We therefore believe the stock of Walmart is slightly undervalued at its current price.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which in this case is $145.10. A good entry point into Walmart would therefore be at $130.60 or below. We expect the stock of Walmart (WMT) to kick up from its current levels to levels closer to our target price (full value price) in coming weeks and months.
We therefore believe the stock of Walmart is slightly undervalued at its current price.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which in this case is $145.10. A good entry point into Walmart would therefore be at $130.60 or below. We expect the stock of Walmart (WMT) to kick up from its current levels to levels closer to our target price (full value price) in coming weeks and months.
Next earnings release of Walmart (WMT)
It is expected that Walmart will release their 3rd quarter 2021 earnings report towards the end of November 2020