After the release of better-than-expected fiscal 2023 fourth-quarter earnings, Walmart (NYSE: WMT) captured the attention of the market yesterday. Although it operates more than 5,000 locations, the largest retail chain provided a gloomy Q1 and FY 2024 outlook. Walmart anticipates shoppers will be cautious with their money. Following the announcement of the data, Walmart’s stock price closed Tuesday’s trading session at $147.33, virtually unchanged from its previous closing.
Bentonville, Arkansas-based Walmart reported fourth-quarter revenues of $164.05 billion, up 7.30% from $152.90 billion in the similar period last year.
For the fourth quarter, which ended January 31, 2023, the company posted a net income of $6.28 billion, or $2.32 per share, an increase from $3.56 billion, or $1.28 per share, in the quarter that ended January 31, 2022.
Excluding unrealized (gains) and losses on equity and other investments and business reorganization and restructuring charges, among others, Walmart recorded a Q4 2023 adjusted net income of $1.71 per share compared with a net income of $1.53 per share in Q4 2022.
According to Refinitiv’s survey of analysts, the business was expected to report earnings of $1.51 per share on revenues of $159.72 billion.
Commenting on the results, Walmart CEO, Doug McMilon, stated “The team delivered a strong quarter to finish the year, and as our results in the last two quarters show, they acted quickly and aggressively to address the inventory and cost challenges we faced last year.”
Segment wise:
- Walmart’s US revenues rose by 8% y-o-y to $113.74 billion.
- Walmart International revenues were $27.58 billion, an increase of 2.10% from last year.
- Sam’s Club revenues grew by 11.30% y-o-y to $21.42 billion.
Also, Walmart US Comp sales increased 8.30% in 4Q 2023, surpassing Refinitiv’s forecast of 5.80%. This compares with Comp sales growth of 5.60% in 4Q22. Likewise, Sam’s club Comp sales grew by 12.20% in Q4.
The aggregate gross profit margin fell by 83 basis points in the December quarter, mainly due to discounts and lower-margin goods.
Looking ahead, Walmart anticipates 1Q 2024 adjusted earnings in the range of $1.25 to $1.30 per share. The company expects sales growth of 4.50% to 5%.
For FY 2024, Walmart expects earnings of between $5.90 and $6.05 per share. Analysts polled by Refinitiv anticipate earnings of $6.50 per share. Furthermore, the company expects revenue growth of only 2.50% to 3% from FY 2023 levels. Also, US Comp sales are anticipated to grow between 2% and 2.50%.
Walmart’s stock is predicted to remain range-bound in the near future due to its strong quarterly earnings beat but weak Q1 FY 2024 outlook.
However, the historical price chart suggests that the stock is currently rising after breaking out of an ascending triangle pattern, with the base of the triangle expected to provide support. The next resistance level is only expected at around 152, and the ultimate oscillator is indicating a reading above 50. Therefore, we expect Walmart’s share price to continue to appreciate in the short term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
