Walmart Reports Mixed Q4 Results; Shares Drop 7%

Walmart's latest quarterly results showed mixed outcomes. The retailer's Q4 beat analyst estimates, yet shares dropped 7% due to a cautious outlook, forecasting slowing profit growth amid strong sales.

Date: 25-02-2025

AI Rating: 5

Mixed Quarterly Performance
Walmart's Q4 results demonstrated both resilience and caution, leading to a notable drop in share prices. While revenue growth was reported at 4% year-over-year, and adjusted operating income increased by 9%, the company has a cautious forecast going forward.

Earnings Per Share (EPS)
Walmart expects adjusted earnings between $2.50 and $2.60 per share for FY'26. This estimate aligns closely with Company expectations but reflects a projected slowdown compared to prior year's growth rate.

Revenue Growth
In FY'26, Walmart projects net sales growth at 3% to 4%, which is less than the previous year's adjusted operating income increase of 9.7%. This deceleration might result in concerns among investors regarding long-term growth potential.

Net Income and Profit Margins Considerations
Although specific net income figures weren't outlined, the adjusted operating income increase indicates some profit margin improvement. However, the deceleration in comparable sales growth throughout FY’25 (Q1'25: 4.9%, Q2'25: 4.2%, Q3'25: 5.1%, Q4'25: 4.6%) suggests potential difficulties in sustaining these profits.

Debt and Free Cash Flow (FCF)
The report notes Walmart carries significant debt at $45.5 billion against a cash position of $9 billion. High financing rates could negatively affect future cash flows and increase the retailer's long-term risk.

Market and Peer Comparison
Compared to the S&P 500, Walmart's share price has shown volatility, with recent stock declines despite previous performance. The company’s results are mixed especially when compared to peers like Target, which is down 6% year-to-date. This competitive landscape may also influence investor sentiment and stock prices further as Walmart navigates market challenges.

Stocks: WMT TGT