Stocks of Walmart and Vizio Rise Following Earnings Beats and Vizio Buyouts

Walmart Inc. witnessed a surge in its shares, reaching record highs on Tuesday amidst a flurry of activities for the retail giant. The company reported an earnings beat, confirmed a $2.3 billion deal to acquire smart-TV maker Vizio Holding Corp., and raised its dividend by 9%.

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As part of the Vizio acquisition, Walmart will pay $11.50 for each Vizio share outstanding, representing a 20.7% premium over Friday's closing price. The acquisition aims to provide Walmart with new opportunities to serve and connect with customers while enhancing advertising capabilities. Walmart's global advertising business has seen robust growth, with a 33% increase during the fourth quarter and a 28% growth for the entire year, reaching $3.4 billion.

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While the deal is expected to slightly impact earnings in the short term due to transaction-related costs, including employee retention and technology integration, the market responded positively. Walmart's stock surged by 5.8% in morning trading, marking its most significant one-day gain in 15 months. The stock's gain would contribute about 66 points to the Dow Jones Industrial Average.

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Vizio shares also soared by 15%, reaching a 15-month high, following reports of talks between the companies about a potential deal.

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On the downside, Walmart provided a current-quarter profit outlook below expectations. For the quarter ending January 31, the company reported a net income of $5.49 billion, or $2.03 per share, compared to $6.28 billion, or $2.32 per share, a year ago. Adjusted earnings per share of $1.80 exceeded the FactSet consensus of $1.64. Total revenue grew by 5.7% to $173.39 billion, surpassing the FactSet consensus of $170.85 billion.

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Walmart's U.S. same-store sales increased by 4.0%, beating the consensus of 3.3% growth. CEO Doug McMillon highlighted lower general merchandise prices, including clothing, and fluctuations in food prices.

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Looking ahead, Walmart expects first-quarter adjusted EPS of $1.48 to $1.56, below the FactSet consensus of $1.60, and guides for full-year adjusted EPS of $6.70 to $7.12 versus expectations of $7.06.

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Despite the profit outlook, Walmart increased its annual dividend rate to $2.49 a share from $2.28, marking a 9.2% increase—the largest dividend boost in over 10 years. After the upcoming three-for-one stock split on February 26, the annual dividend rate will be 83 cents a share, with the quarterly dividend at 20.75 cents a share.

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The new dividend, with current stock prices, implies a dividend yield of 1.38%, slightly below the S&P 500 index's implied yield of 1.44%.

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Over the past three months, Walmart's stock has rallied by 16.1%, outpacing the Dow's advance of 9.7%. The company's strong performance reflects its strategic moves, including acquisitions and dividend increases, signaling confidence in its future growth and resilience in a dynamic market.

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