Walmart (WMT) Shares Rally on Sales Growth, Goldman Sachs Sees 'Solid' Results

Shares of Walmart (NYSE: WMT) are up over 2% today after the company reported Q4 2022 earnings that topped estimates.

Walmart reported adjusted EPS of $1.53, up from $1.39 per share in the year-ago period and beating the consensus estimates of $1.51 per share. Revenue came in at $152.87 billion, up 0.5% YOY and outshining analyst estimates of $151.67 billion.

Total U.S. comparable sales ex-gas surged by 6.3%, in line with analyst expectations. Walmart-only U.S. store comparable sales ex-gas rose by 5.6%, slightly above the analyst consensus of 5.5%. Sam’s Club reported U.S. comparable sales ex-gas grew by 10.4%, while analysts were expecting 9.84% growth.

For full-fiscal 2023, Walmart expects EPS growth to mid-single digits and announced its plan for share buyback of at least $10 billion in the current fiscal year. The company expects net sales growth of around 3% in FY 2023 and forecasts net sales growth around 4%, excluding divestitures.

Walmart raised annual dividends to $2.24 per share and quarterly dividends to 56 cents per share from 55 cents per share.

“We had another strong quarter to finish off a strong year. We have momentum in our business in all three segments," said Walmart CEO Doug McMillon. "We’re being aggressive with our plans and executing on the strategy."

Goldman Sachs analyst Kate McShane reiterated a Buy rating and a $175.00 per share price target.

“We expect the stock to trade higher today given the solid 4Q results with positive gross margin expansion in the US and enterprise, along with FY22 guidance coming in-line with its long term outlook despite the tough compare. On the call, we are looking for detail on the cadence of the 4Q comp, QTD trends along with category detail, ecommerce profitability, any change in vendor behavior regarding inflation, view on inventory availability, the supply chain and transportation costs, and the promotional outlook for grocery,” McShane wrote in a note.

Stifel analyst Mark Astrachan commented, “While F4Q EBIT was below expectations, it would have exceeded consensus by ~$300mm excluding higher-than-expected U.S. supply chain/Covid-related costs. Most notably F4Q U.S. comp growth was solid, with gross margin expansion much better-than-feared given concerns regarding increasing price competition despite inflation.”

By Senad Karaahmetovic | [email protected]

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