What Happened?
Shares of retail behemoth Walmart (NYSE: WMT) fell 8.1% in the morning session after the company reported disappointing fourth quarter 2024 (fiscal 2025) financial results. Revenue was in line with estimates, with same-store sales roughly meeting expectations. The top line growth outlook wasn't exciting, with management guiding for FY'26 sales growth of 3% to 4%, though it's hard to pile on the company given its massive revenue base. Operating income is expected to grow between 3.5% and 5.5%, but profitability will take a 1.5% hit from the VIZIO acquisition and a tough comparison due to the leap year. These margin pressures contributed to the poor earnings outlook, which fell sharply below Wall Street's estimates. In addition, Walmart's results are often seen as a barometer for the broader U.S. retail sector, and the underwhelming performance adds to concerns about the strength of consumer spending. Overall, this quarter could have been better.
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What The Market Is Telling Us
Walmart’s shares are not very volatile and have only had 2 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 9.3% on the news that the company reported a "beat and raise" quarter. Walmart exceeded analysts' revenue and EPS expectations this quarter. That the company raised its full year outlook for net sales and EPS as well is another major positive. The company also provided positive macro insights on consumption trends. In an interview with CNBC, Chief Financial Officer John David Rainey noted that consumer behavior had been relatively consistent in the quarter, with the back-to-school season "off to a pretty good start." Overall, this was a solid quarter, especially as other consumer-facing companies warn of tepid spending trends and macro headwinds.
Walmart is up 8.3% since the beginning of the year, and at $97.14 per share, it is trading close to its 52-week high of $105.05 from February 2025. Investors who bought $1,000 worth of Walmart’s shares 5 years ago would now be looking at an investment worth $2,483.
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