Wal-Mart (NYSE: WMT) reported their much anticipated, second quarter earnings results Thrusday. The retail giant reported earnings per share of $1.21 which was on revenue of $120.85 billion. Compare that to last year at this time where they reported earnings per share of $1.08 on revenue of $120.23 billion and you can start to see why the stock popped 1.88%.
The breakdown:
- The quarterly revenues included $535 million that Wal-Mart made when it sold one of its Chinese businesses to JD.com (NYSE: JD). If you deduct this sale from the earnings you still get to $1.07 per share for the second quarter.
- Another metric that analysts love to look at for retailers is same-store sales. For Wal-Mart their same-store sales rose 1.6% at both the large super centers along with the smaller discount stores. As for Sams club they enjoyed a 0.6% same-store sales growth minus fuel sales.
- Total net sales rose 3.1% for the quarter.
- Operating income rose 1.6% year over year which includes the gain from the sale of the Chinese business. If we back out the proceeds from that sale we would see operating income fell 7.2%. The company did address this and attributed the decline to "investments in people and technology" along with "currency fluctuations." Investors did not respond negatively to this because if you back out currency fluctuations, operating income rose 4.2%.
As for the forward guidance:
Wal-Mart guided third-quarter fiscal 2017 earnings per share in a range of $0.90 to $1.00 and U.S. same-store sales for the quarter up 1.0% to 1.5%. The company raised its full-year earnings per share estimate from a prior range of $4.00 to $4.30 to a new range of $4.15 to $4.35. The company leaders were quick to remind analysts that guidance assumes that currency exchange rates remain where they are now.
The massive share buyback:
The $20 billion share repurchase program remains in tact. During the second quarter, Wal-Mart repurchased $2.12 billion in its common stock (about 30 million shares) and has $12.7 billion remaining in its buyback program.
And the stock performance?
Wal-Mart's shares moved to new 2016 highs Thursday and have consistently posted new highs throughout the year. Every, and any pullback this year has been bought quickly. Every time the stock made a low this year it has broken out to new highs within 8 days.