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Category: Stock Market and Walmart
Date: 19 February 2020 Stock Price: $119.63 We take a look at the latest earnings report of retail group, Walmart for the 4th quarter of their 2020 fiscal year. Walmart employs roughly 2.2 million people and have over 11 200 stores across the globe.
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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.
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 4th quarter 2020 earnings release
The data below refers to the latest quarter unless specified otherwise
- Revenue: $141.671 billion (up from $138.793 billion for the same quarter of the previous year)
- Revenue increased by 2.1% over the last 12 months
- Cost of sales: $107.748 billion (up from $104.907 billion for the same quarter of the previous year)
- Cost of sales increased by 2.7% 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: $4.141 billion (up from $3.687 billion for the same quarter of the previous year)
- Diluted income per share: $1.45 (up from $1.27 for the same quarter of the previous year)
- PE ratio of Walmart: 23.1
- Diluted weighted number of shares outstanding: 2.855 billion (down from 2.914 billion for the same quarter of the previous year)
- Cash and cash equivalents: $9.465 billion
- Cash and cash equivalents per share: $3.31
- Cash and cash equivalents makes up 2.8% of Walmart's market capital
- Cash and cash equivalents makes up 4% of Walmart's total assets
- Receivables, net: $6.284 billion
- Receivables makes up 2.65% of Walmart's total assets
- Inventories: $44.435 billion
- Inventories makes up 18.78% of Walmart's total assets
- Stockholders equity in Walmart: $81.552 billion
- Stockholders equity per share in Walmart: $28.57
- So Walmart is trading at 4.18 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
- Cash generated from operations (for full fiscal 2019): $25.255 billion
- Cash generated from operations per share (for fiscal 2019): $8.84
Walmart (NYSE:WMT) management commentary on the results and earnings guidance
“We thank our associates for another good year. In Q4, we saw strong performance in the U.S. with eCommerce and Sam’s Club plus strength in Mexico, India and China. We started and finished the quarter with momentum, while sales leading up to Christmas in our U.S. stores were a little softer than expected. The new year has started off well, and we look forward to another strong year. We remain focused on providing our customers with the best omnichannel experience from any retailer. ” Doug McMillon President and CEO, Walmart
Brett Biggs, Chief Financial Officer of Walmart Inc., said: “The fourth quarter started and ended strong with solid sales growth through Cyber Monday and in January. In the few weeks before Christmas, we experienced some softness in a few general merchandise categories in our U.S. stores. However, Walmart U.S. grocery sales and eCommerce sales were strong throughout the quarter. Sam’s Club performed well, including solid results in eCommerce. We experienced softness in some key international markets, as well as in Chile, where unrest led to disruption in the majority of our stores. Walmex, China and Flipkart all had a solid quarter. The holiday season delivered positive transaction growth and underlying expense leverage was strong for the quarter. However, it wasn’t as good as expected due to lower sales volumes and some pressure related to associate scheduling. We understand the factors that affected our results and are developing plans to address them. We remain confident in our business strategy and our ability to deliver value and convenience for our customers through an integrated omnichannel offering across the globe.”
Brett Biggs, Chief Financial Officer of Walmart Inc., said: “The fourth quarter started and ended strong with solid sales growth through Cyber Monday and in January. In the few weeks before Christmas, we experienced some softness in a few general merchandise categories in our U.S. stores. However, Walmart U.S. grocery sales and eCommerce sales were strong throughout the quarter. Sam’s Club performed well, including solid results in eCommerce. We experienced softness in some key international markets, as well as in Chile, where unrest led to disruption in the majority of our stores. Walmex, China and Flipkart all had a solid quarter. The holiday season delivered positive transaction growth and underlying expense leverage was strong for the quarter. However, it wasn’t as good as expected due to lower sales volumes and some pressure related to associate scheduling. We understand the factors that affected our results and are developing plans to address them. We remain confident in our business strategy and our ability to deliver value and convenience for our customers through an integrated omnichannel offering across the globe.”
Fiscal 2021 full year guidance The following guidance reflects the company’s expectations for fiscal year 2021. Assumptions in the guidance include that economic conditions, currency rates and the tax and regulatory landscape remain generally consistent. The company continues to monitor the events in Chile and the Coronavirus outbreak and has not included any potential financial effects in its assumptions. Additionally, the guidance assumes no further change in fair value of the Company’s equity investment in JD.com.
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 $84.30 and its currently trading at $119.63 a stock. That's a healthy 41.9% 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 $125.38 than it is to its 52 week low of $96.53 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 $125.38 than it is to its 52 week low of $96.53 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
Recent coverage of Walmart
The extract below covers the latest regarding Walmart as obtained from TheStreet.com
Walmart (WMT) reported earnings before the bell Tuesday, Feb. 18. The earnings for its fourth quarter came in weaker than analysts were expecting.
The company reported earnings of $1.38 a share, which fell short of expectations for $1.44 a share. Sales came in at $141.67 billion, which came in shy of expectations for $142.5 billion.
Same-store sales rose by 1.9% in the U.S. Wall Street, however, had been expecting a 2.3% gain. Brett Biggs, CFO, noted that the holiday seasons weren’t as strong as Walmart had expected. “In the few weeks before Christmas, we experienced some softness in a few general merchandise categories in our U.S. stores," Biggs said in a statement, noting the company also experienced softness in some key international markets, as well as in Chile, "... where unrest led to disruption in the majority of our stores."
Executives on the company's post-earnings conference call said they expect a "couple of cents" of negative impact on the company's fiscal first-quarter due to the outbreak of COVID-19, which has impacted sales in the Far East, though the company is not officially factoring the coronavirus into its forecast for the new year.
Read the full article here
Walmart (WMT) reported earnings before the bell Tuesday, Feb. 18. The earnings for its fourth quarter came in weaker than analysts were expecting.
The company reported earnings of $1.38 a share, which fell short of expectations for $1.44 a share. Sales came in at $141.67 billion, which came in shy of expectations for $142.5 billion.
Same-store sales rose by 1.9% in the U.S. Wall Street, however, had been expecting a 2.3% gain. Brett Biggs, CFO, noted that the holiday seasons weren’t as strong as Walmart had expected. “In the few weeks before Christmas, we experienced some softness in a few general merchandise categories in our U.S. stores," Biggs said in a statement, noting the company also experienced softness in some key international markets, as well as in Chile, "... where unrest led to disruption in the majority of our stores."
Executives on the company's post-earnings conference call said they expect a "couple of cents" of negative impact on the company's fiscal first-quarter due to the outbreak of COVID-19, which has impacted sales in the Far East, though the company is not officially factoring the coronavirus into its forecast for the new year.
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 3rd quarter 2019 earnings report and their earnings guidance our valuation model provides a target (full value) price for Walmart stock at $98.70 a stock (down from our 3rd quarter 2019 earnings report valuation of Walmart).
We therefore believe the stock of Walmart is overvalued 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 $98.70. A good entry point into Walmart would therefore be at $88.80 or below. We expect the stock of Walmart to pull back 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 overvalued 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 $98.70. A good entry point into Walmart would therefore be at $88.80 or below. We expect the stock of Walmart to pull back from its current levels to levels closer to our target price (full value price) in coming weeks and months.
Next earnings release of Walmart
It is expected that Walmart will release their 1st quarter 2021 earnings report towards the end of May 2020