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Walmart shares rally on solid Q4 earnings. dividend hike; Confirms purchase of Vizeo

AInvestTuesday, Feb 20, 2024 10:26 am ET
2min read

Walmart, the world's largest retailer, reported better-than-expected fiscal fourth-quarter earnings early Tuesday, with revenue rising 5.7%, fueled by a 23% jump in e-commerce sales. The company also announced a 9% increase in its annual cash dividend and the acquisition of TV maker Vizio for $2.3 billion. The collective news has boosted the stock to an all-time high of $175 in pre-market trade, 

WMT"s earnings per share (EPS) for the quarter came in at $1.80, beating the consensus of $1.64. Additionally, revenue rose by 5.7% year over year to $173.4 billion, exceeding the consensus of $170.85 billion. Revenue was largely driven by a significant increase in e-commerce sales, which surged by 23%. 

The company's U.S. same-store sales grew by a solid 4%, outperforming projections for a 3.4% increase.

Looking ahead, Walmart provided guidance for the first quarter (Q1), expecting EPS in the range of $1.46 to $1.56, excluding non-recurring items. This falls slightly below the consensus of $1.60. The company also projects Q1 revenues to grow by 4-5% year over year to $1.58-1.60 billion, compared to the consensus of $157.27 billion.

For the fiscal year ending in January 2025, Walmart foresees net sales increasing by 3-4%, reaching a range of $667.6-674.1 billion. Adjusted EPS for the same period is projected to be between $6.70 and $7.12, which places the midpoint below expectations. After the split, which is scheduled to go into effect next week, earnings will be between $2.23 to $2.37.

Walmart's management is confident in the company's growth potential and cash flow, as evidenced by their decision to raise the annual dividend by 9% to $0.83 per share, the largest increase in over 10 years.

The company also announced its acquisition of Vizio, a smart TV manufacturer, for $2.3 billion. Walmart's planned acquisition of VIZIO aims to enhance customer connection through innovative TV and in-home entertainment, while amplifying advertising effectiveness for brands. This move is poised to boost Walmart Connect, its U.S. media business, by integrating VIZIO's advertising capabilities with Walmart's extensive reach. The transaction, which has received unanimous board approval and the green light from stockholders holding a majority vote, awaits regulatory approval. Post-acquisition, VIZIO will no longer be publicly listed, and while the buyout is expected to be initially slightly dilutive to Walmart's earnings per share due to associated costs, the investment return is forecasted to surpass Walmart's return on investment metrics. Walmart intends to finance this deal through cash or debt, and VIZIO's operations will be incorporated into Walmart's U.S. business segment upon completion.

As a reminder, Walmart is scheduled to split its stock in a 3-for-1 ratio on February 26, 2024. After the close of the market on this date, shareholders will receive two additional shares for every one share of Walmart stock they own. This move is anticipated to increase the liquidity of Walmart shares and make them more accessible to a broader base of investors.

Overall, Walmart's fourth-quarter earnings report highlights the company's impressive performance, particularly in e-commerce sales and same-store sales growth. The company's ability to adapt to changing consumer behavior and leverage its digital capabilities has contributed to its strong financial performance. Walmart's positive guidance for future quarters, combined with the significant dividend increase, reinforces management's confidence in the company's ability to sustain growth and create value for shareholders.


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