ii view: Walmart boosts dividend but growth targets a concern

Full-year results to 31 December  

• Currency adjusted revenue up 5.6% to $681 billion (£539 billion)
• Adjusted earnings per share (EPS) up 13% to $2.51 per share
• Total dividend for the year 13% to 94 US cents per share
• Total 2024 share buybacks of $4.5 billion

Guidance: 

• Expects revenues to grow by 3-4% for the year ahead 
• Expects EPS of between $2.50 and $2.60 for the year ahead

Chief executive Doug McMillon said:

“Our team finished the year with another quarter of strong results. We have momentum driven by our low prices, a growing assortment, and an eCommerce business driven by faster delivery times. 

“We’re gaining market share, our top line is healthy, and we’re in great shape with inventory. We’ll stay focused on growth, improving operating margins, and strengthening ROI as we invest to serve our customers and members even better.”

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ii round-up:

Retailer Walmart Inc (NYSE:WMT) sells items ranging from food and drink to clothes, toys and furniture. 

Operating across more than 10,500 stores and numerous eCommerce websites in 19 countries, Walmart serves approximately 270 million customers each week.

For a round-up of these latest results announced on 20 February, please click here. 

ii view:

Started in 1962 and listing on the New York Stock Exchange in 1972, Walmart today employs around 2.1 million people. As well as Walmart branded stores across the US and Canada, the Arkansas headquartered company also owns and operates Sam's Club warehouse outlets. Walmart US outlets generated most sales in 2024 at 68%, with Sam’s Club a further 14% and operations overseas the balance of 18%. 

For investors, a trade war between the US and partners such as Canada make the outlook more uncertain for product prices, inflation, and therefore potentially US interest rate policy. Company revenue growth forecasts for 2025 of 3-4% was less than Wall Street analysts expected. Potential cuts to US government workers, with many potentially shopping in Walmart, could now crimp demand. A forecast one-year price/earnings (PE) ratio above the three- and 10-year averages may suggest the shares are not obviously cheap, while competition across the retail sector remains intense, with rivals such as Costco Wholesale Corp (NASDAQ:COST) and Dollar General Corp (NYSE:DG) also fighting hard.

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More favourably, online sales grew around 20% in both the US and overseas during the final quarter of 2024. Net debt of $37 billion at the end of 2024 compares to a stock market value of over $650 billion and points to a strong balance sheet. A diversity of product and geographical regions exist, while the dividend has grown consecutively for more than 50 years, with the 2024 increase its biggest in a decade, leaving the shares on a forecast  yield of around 1.1%. 

For now, and given increased US consumer outlook uncertainty in a Trump presidency, some caution looks sensible. That said, this retail giant with a focus on consumer value does appear to remain worthy of its place in many diversified investor portfolios and focused on the long term. 

Positives: 

Diversity of product and geographical region

Focus on costs

Negatives:

Uncertain economic outlook

Subject to currency moves

The average rating of stock market analysts:

Buy