Walmart (WMT) shares fall 3% as 'underwhelming' forecast offsets strong Q4 results

Walmart (NYSE: WMT) reported better-than-expected results for its fourth quarter, although its shares still trade lower in pre-market Tuesday as investors were expecting more bullish guidance. Walmart's report comes after Home Depot (NYSE: HD) reported mixed Q4 results and light guidance, which sees its shares trade more than 4% lower in pre-open trading.

Walmart posted EPS of $1.71 on revenue of $164 billion, easily ahead of the consensus for earnings of $1.52 per share on sales of $159.8B. Revenue increased by 7.3% as U.S. comparable sales, excluding gas, grew 8.8%. The eCommerce growth was 17% and 18% on a two-year stack, the company said.

“We’re excited about momentum. The team delivered a strong quarter to finish the year, and as our results in the last two quarters show, they acted quickly and aggressively to address the inventory and cost challenges we faced last year,” said CEO and President Doug McMillon.

For this quarter, Walmart sees EPS between $1.25 and $1.30 while sales are expected to grow 4.5-5%. Analysts were expecting earnings of $1.36 per share. For 2023, WMT projects EPS in the range of $5.90-6.05, a considerable miss relative to the consensus of $6.50. Full-year sales are seen increasing by 2.5-3%.

“We built momentum in the third quarter and that continues. We are well-positioned to start the fiscal year,” McMillon added.

While Q4 results were “strong,” Vital Knowledge analysts blamed the after-earnings move lower on “underwhelming guidance.”

Goldman Sachs analyst Kate McShane weighed in positively on Walmart's results and noted that the below-expectations forecast is "mostly driven by one-time impacts and items below the line."

"We expect the stock to trade lower today given the lower-than-expected FY23 guidance," McShane said in a client note.

Stifel analyst Mark Astrachan added: "While the result is disappointing relative to consensus, we anticipate a more modest share-price reaction as buy-side expectations were for weaker initial EPS guidance."

As of 08:10 ET (13:10 GMT), Walmart shares trade 3.3% in the red.

By Senad Karaahmetovic

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