24/7 Wall St. Insights
- Walmart Inc. (NYSE: WMT | WMT Price Prediction) stock has risen sharply on good revenue.
- So the upcoming quarter, with the holidays, should be strong.
- Also: Dividend legends to hold forever.
If the stock market is right, Walmart Inc. (NYSE: WMT) has a bright future, at least in the short term. Its shares are up 56% this year, while the S&P 500 is 23% higher. The company, the largest pure-play in the brick-and-mortar sector (although it has a huge e-commerce business as well), also signaled it expected the end of the year to be strong.
The holiday season starts on October 30, or November 1, or Thanksgiving, depending on who asks. When the U.S. Department of Commerce posted the third quarter’s numbers, it showed that consumer spending rose the most in a year and a half. Inflation also slowed, which should increase discretionary spending. That is another sign of strong holiday spending.
In the most recent quarter, Walmart’s U.S. revenue rose 4.5% to $115.3 billion. E-commerce revenue rose 22%. Operating income was $6.6 billion, up 7.8%. The company reported, “Value-convenience proposition continues to resonate with customers and members; share gains across income cohorts primarily driven by upper-income households.” Walmart’s low-price benefit brings in more than middle- and lower-income shoppers.
Walmart also offered strong guidance. Across all revenue, it expected an increase of 3.25% to 4.25% for the current quarter.
Walmart’s most substantial advantage over the competition may be its store footprint. It has 4,166 stores in America, while smaller rival Target Corp. (NYSE: TGT) has 1,897. Walmart claims, “With 90% of the U.S. population living within 10 miles of our stores, we’re primed to combine our physical locations with our e-commerce business to offer a level of convenience never before seen.”
It has advantages no other retailer can come close to matching.
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