Friday, 16 August 2024
by BD Banks
Shares of Walmart (NYSE: WMT) were jumping today after the retail giant delivered another strong earnings report, beating estimates on the top and bottom lines and raising its full-year guidance.
The results showed that Walmart continues to execute as well as any other retailer in a challenging environment, thriving on the strength of its grocery business, reputation for low prices, and solid execution in the omnichannel.
As of 10:13 a.m. ET, the stock was up 6.7% on the news.
Image source: Walmart.
Walmart has been one of the most resilient retailers on the market in recent years, and that pattern continued in the second quarter. Revenue rose 4.8% to $169.3 billion, beating estimates at $168.5 billion.
Comparable sales at Walmart U.S. stores, which make up the majority of the business, rose 4.2% excluding fuel, and e-commerce sales jumped 21% globally, showing the company continues to gain share in that key market. Walmart is also gaining traction in its advertising business with revenue up 26% globally and 30% in the U.S.
The company pared inventory by 2%, helping to grow gross margins by 43 basis points to 24.4%. Operating income increased in all three of its segments, and adjusted earnings per share rose 10% to $0.67, ahead of the consensus at $0.65.
CEO Doug McMillon said, “Each part of our business is growing — store and club sales are up, e-commerce is compounding as we layer on pickup, and even faster growth in delivery as our speed improves.” He also credited strength in the third-party marketplace, advertising, and membership for the strong performance.
Calling the consumer environment generally stable, Walmart raised its guidance for the fiscal year. It now expects net sales to increase between 3.75% and 4.75%, up from a previous range of 3% to 4%.
It also raised its adjusted EPS guidance from $2.23-$2.37 to $2.35-$2.43, which matches the consensus at the upper end and is ahead of $2.22 in the quarter a year ago.
Investors seem to be betting that the retailer will beat that guidance as Walmart fires on all cylinders. The stock looks like a good bet to keep marching higher.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walmart. The Motley Fool has a disclosure policy.