Walmart's Stock Approaches a Record as Sales Beat Again and Outlook Improves

Shares of Walmart Inc. surged to an all-time high during early trading on Tuesday, following the retailer’s robust earnings report and an upgraded full-year forecast. The company attributed its performance to strong e-commerce growth and an increase in in-store volumes, reflecting consumer resilience and renewed discretionary spending.

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Walmart’s U.S. segment saw general merchandise sales turn positive, signaling a recovery in consumer demand for non-essential items. Additionally, the company captured greater market share, particularly among higher-income households.

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“U.S. customers remain resilient,” said Chief Financial Officer John David Rainey during a conference call. He added that consumer behavior has remained consistent over the past four to six quarters.

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The retailer’s stock jumped 2.6% in early trading, leading the gainers in the Dow Jones Industrial Average premarket. This placed Walmart’s shares on track to surpass their previous record close of $85.50, achieved on Nov. 13.

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“In the U.S., in-store volumes grew, pickup from stores grew at an even faster pace, and delivery from stores outpaced both,” said CEO Doug McMillon in a statement.

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Financial Highlights

For the quarter ending Oct. 31, Walmart’s net income rose significantly to $4.58 billion, or 57 cents per share, compared to $453 million, or 6 cents per share, a year earlier. Excluding non-recurring items, adjusted earnings of 58 cents per share exceeded analysts’ expectations of 53 cents, marking the company’s ninth consecutive quarter of beating earnings estimates.

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Revenue climbed 5.5% to $169.59 billion, surpassing the FactSet consensus of $167.69 billion. This growth was driven by a 27% surge in e-commerce sales and a 16.1% increase in membership and other income. Walmart has now outperformed revenue expectations for 19 consecutive quarters.

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In its core U.S. business, sales increased 5% to $114.9 billion, exceeding projections of $113.61 billion. Comparable-store sales, a key industry metric, rose 5.3%, outpacing the 3.8% growth analysts anticipated. The number of transactions increased 3.1%, while the average ticket value grew 2.1%.

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Walmart noted that general merchandise sales, which had been flat in the prior quarter, showed their first positive inflection in 11 quarters. This indicates a rebound in consumer demand for discretionary items.

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Walmart’s warehouse business, Sam’s Club U.S., also delivered strong results. Net sales increased 3.9% to $22.9 billion, aligning with expectations. Comparable-store sales rose 7%, significantly exceeding projections of a 4.1% increase. This was the largest beat in two years, driven by a 6.4% rise in transactions and a modest 0.5% increase in average ticket size.

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International sales climbed 8% to $30.3 billion, slightly above analysts’ estimates of $30.1 billion. Growth was led by strong performances in Flipkart, Walmex, and China.

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Looking ahead, Walmart raised its full-year 2024 guidance. The company now expects adjusted earnings per share to range between $2.42 and $2.47, up from its previous outlook of $2.35 to $2.43. Additionally, Walmart anticipates net sales growth of 4.8% to 5.1%, an increase from its earlier forecast of 3.75% to 4.75%.

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Analysts expressed confidence in Walmart’s momentum heading into the holiday season. “We believe Walmart remains well-positioned,” said Jefferies analyst Corey Tarlowe, citing robust traffic trends at Walmart U.S. and Sam’s Club U.S., where transactions rose 3.1% and 6.4%, respectively.

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D.A. Davidson analyst Michael Baker echoed these sentiments, noting that Walmart continues to gain market share. “Walmart benefits not only from a value-focused environment but also from internal improvements that enhance its business model,” Baker said.

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Stock Performance

Year-to-date, Walmart’s stock has surged 60% as of Monday’s close, outperforming the Consumer Staples Select Sector SPDR ETF’s 11.8% gain and the Dow Jones Industrial Average’s 23.6% advance. Walmart’s ability to capitalize on e-commerce trends and capture higher-income consumers has solidified its position as a retail leader in 2024.

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