Walmart’s WMT stock is catching the eyes of many investors as its upcoming three-to-one stock split is approaching on Monday, February 26. In anticipation of this event, WMT shares are expected to open near $59 next week, a notable decrease from the current $177 per share.
With a substantial portion of Walmart’s 400,000 associates involved in the company’s stock purchase program, the decision to implement this split aims to make shares more accessible to investors across the board. As the retail giant gears up to unveil its Q4 results, let’s delve into Walmart’s recent stock performance to gauge whether it presents as a compelling investment opportunity in the near term.
Recent Stock Performance
Walmart’s stock has already surged by +12% year-to-date, surpassing the S&P 500’s +6% growth as well as outpacing peer Target’sTGT +7% increase. This positive momentum follows a noteworthy +24% climb in Walmart’s shares over the past year, which managed to outperform Target and its Zacks Subindustry but slightly lagged behind the broader market benchmark.
Favorable Q4 Results Driven by E-commerce Sales
In its recent Q4 earnings report, Walmart displayed a strong performance, echoing positive sentiment throughout the broader retail sector ahead of Target’s upcoming earnings announcement. Exceeding expectations, Walmart reported earnings of $1.80 per share, surpassing the Zacks Consensus estimate of $1.65 per share by 9%. Furthermore, fourth-quarter earnings experienced a 5% year-over-year increase, with Q4 sales totaling $173.38 billion, a 5% rise from estimates of $170.63 billion.
Outlook and Earnings Per Share
Walmart’s strong quarter was partially attributed to the robust growth of its e-commerce division, which saw a notable 23% surge in sales during Q4, propelling the company’s online sales to over $100 billion for the year. Overall, Walmart’s fiscal 2024 saw total sales increase by 6%, reaching $648.1 billion, whereas annual earnings per share rose by 6% to $6.65.
EPS & Outlook Overview
Post the stock split, Walmart’s earnings per share (EPS) will see a natural dilution as the number of outstanding shares increases. It’s imperative to note that while this adjustment occurs, the total earnings and net income of the company remain unaffected, much like revenue or sales figures.
Investment Takeaway
Currently sporting a Zacks Rank #3 (Hold), Walmart has seen a vibrant start to the year, with its stock price rallying impressively. While the company’s expanding e-commerce division and long-term potential continue to be attractive, it’s essential to exercise caution. Despite the enthusiasm surrounding the stock split, historical data suggests that it may not always lead to an immediate uptick in share prices.