May 20, 2024

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Walmart shares surged after earnings beat, and market cap surpassed $500 billion

Walmart shares surged after earnings beat, and market cap surpassed $500 billion

Walmart (WMT) stunned Wall Street again, causing shares to jump about 6% in early trading Thursday.

For the first quarter of fiscal 2025, America’s largest retailer reported revenue of $161.51 billion, higher than the expected $159.58 billion, while adjusted earnings per share were also higher at $0.60, compared to estimates of $0.53.

CEO Doug McMillion called it a “terrific quarter” in the release, adding that the team is “focused on saving our customers money and time.”

Total U.S. same-store sales rose 3.9% year over year, led by growth from Sam’s Club, up 4.4%, as Americans sought deals on groceries.

Its namesake stores saw same-store sales grow 3.8%, fueled by repeat customer visits, although ticket volume was flat. The company hinted that it was gaining market share among high-income households.

Global e-commerce sales jumped 21%, boosted by in-store pickup and delivery, and its online marketplace.

These results come at a time when the company plans to eliminate hundreds of jobs and has asked employees to move to its headquarters in Bentonville, Arkansas. The Wall Street Journal reported Tuesday.

Walmart is the largest employer in the United States, with 1.6 million American workers.

During the quarter, the company also conducted a stock split for the 12th time in 50 years. Its shares are up 13.9% this year, outperforming the S&P 500 (^ GSBC10% profit.

Ahead of the report, UBS analyst Michael Lasser wrote that “the stock has room to run” in a note to clients. He added that the first quarter should show “more evidence that the stock fits well into what the market is looking for right now, which is consistent action that is more insulated from ongoing macro pressures from the rest of the group.”

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“Walmart is in a dual position to attract both low-income and upscale consumers over the coming years,” Deutsche Bank analyst Christina Katai told Yahoo Finance by phone ahead of the report.

Daniela Breithauer, an analyst at HSBC Bank, described the stock as the best choice before the report was released.

“The future of grocery shopping is increasingly inclusive, and Walmart is the largest grocer in America,” Breithauer told Yahoo Finance. “You have a big player online, which is Amazon, but in grocery stores…Walmart has a big advantage.”

Merchandise sales declined by low single digits, consistent with the last three quarters. But U.S. grocery sales increased by mid-single digits, driven by the sale of more fresh foods and private-label goods, Marc Astrachan, Stifel’s managing director, wrote in a note to clients after the results..

The company benefits from its pricing power and economic scale, in addition to technology investments and $9 billion in store renovations.

Recently, the company introduced a new private label brand called Better merchandisewhich offers high-quality, trendy items at prices ranging from under $2 to under $15.

Its lucrative advertising business is also boosting its revenues, with a 24% increase in global sales and a 26% jump in US sales.

Here’s what Wall Street expects from Walmart in the first quarter of fiscal 2025, compared to the first quarter of 2024, according to Bloomberg consensus data:

he won: $161.51 billion compared to $159.58 billion

Adjusted earnings per share: $0.60 vs $0.53

US same-store sales growth: 3.9% vs 3.42%

Walmart store sales in the United States: 3.8% vs 3.45%

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Sam’s Club store sales growth in the United States: 4.4% vs. 3.3%

Growth of Walmart’s e-commerce in the United States: 22% vs 13.33%

A Walmart employee fulfills Instacart orders in the produce aisle in North Carolina.  (Photo by: Lindsay Nicholson/UCG/Universal Image Collection via Getty Images)

A Walmart employee fulfills Instacart orders in the produce aisle in North Carolina. (Lindsay Nicholson/UCG/Universal Image Group via Getty Images) (UCG via Getty Images)

For the full fiscal year 2025, the company expects net sales to grow at the high end of 3% and 4%, and operating income to grow at the high end of 4% to 6%.

“We expect Walmart US and Sam’s Club US net sales growth to be in line with enterprise and international growth to be higher than enterprise growth. We expect all three segments to contribute to operating income growth, led by Walmart US, Walmart International and Walmart US,” said John David Rennie, CFO of Walmart US. Walmart, on a call with investors after Q4 2024 results: “Then Sam’s in the US.”

Brooke DiPalma is a senior reporter at Yahoo Finance. Follow her on Twitter at @Brooke De Palma Or email her at [email protected].

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