Walmart
Inside the Numbers
In Q1, Walmart reported $1.69 in earnings per share, handily topping expectations of $1.21 per share. Many were pessimistic going into the report as the company faced tough comps from Q1 which saw a huge jump in sales due to consumers stockpiling food and essentials.
Revenue came in at $138.3 billion vs. $132.0 billion expected. This was a 3% increase from last year. Most analysts were expecting a slight decrease given the unique conditions of 2020's Q1. Same-stores sales increased by 6%, significantly better than expectations of a 0.9% increase. The average transaction size also increased by 9.5%.
The company attributed its beat to increased visits to stores and to its website. Essentially, its stores are busier due to people feeling more confident about venturing out amid vaccinations, while its online channel's positive momentum remains on track.
Online sales increased by 37% compared to last year's Q1. Many believed that online sales growth would slip when in-store sales would increase as the economy reopens. So far, this is not the case.
In the conference call, management noted strength in items that indicate people are ready to return to their normal lives such as makeup and teeth whitening kits, while sales of items that were strong during the pandemic continue to be strong such as laptops, tablets, bikes, etc.
Walmart also hiked its guidance for the full year as it sees sales and earnings growth in the high single-digits. The company attributed continued positive benefits from stimulus payments, expectations of a strong labor market, rising wages, and continued strength in Q2 as factors for raising guidance.
Stock Price Outlook
Over the last couple of months, the stock market has endured a stealth correction. Participation is thinning out. In recent weeks, even stalwarts like commodities and industrial stocks have started to move lower.
Yet, one major outperformed has been the big-box retailers like Walmart, Target
Walmart is currently down about 7% from it's all-time highs. Given its combination of value and growth, it's likely to make new highs and then continuing to trend higher.