Stock Story -
What Happened: Shares of retail behemoth Walmart (NYSE:WMT) jumped 9.3% in the morning session after the company reported a "beat and raise" quarter. Walmart exceeded analysts' revenue and EPS expectations this quarter. That the company raised its full year outlook for net sales and EPS as well is another major positive.
The company also provided positive macro insights on consumption trends. In an interview with CNBC, Chief Financial Officer John David Rainey noted that consumer behavior had been relatively consistent in the quarter, with the back-to-school season "off to a pretty good start."
Overall, this was a solid quarter, especially as other consumer-facing companies warn of tepid spending trends and macro headwinds.
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What is the market telling us: Walmart’s shares are not very volatile than the market average and over the last year have had only 2 moves greater than 5%. In context of that, today’s move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago, when the stock gained 7% on the news that the company reported first-quarter earnings that constituted a 'beat and raise'. Specifically, Walmart exceeded analysts' revenue, gross margin, and EPS expectations. That performance was driven by beats in its U.S. and International Walmart operations. The company effectively raised its full year guidance by saying that it expects calendar 2024 results to come in at the high end of previously-provided guidance for revenue and EPS, which is a positive. The company also bought TV maker Vizio for just over $2 billion in February 2024 to support Walmart Connect, its media business, although this is having a negligible impact on reported financials. Zooming out, we think the company had a solid quarter.
Walmart is up 38% since the beginning of the year, and at $73.26 per share, has set a new 52-week high. Investors who bought $1,000 worth of Walmart’s shares 5 years ago would now be looking at an investment worth $1,950.
