Retail behemoth Walmart (NYSE:WMT) met Wall Street’s revenue expectations in Q4 CY2024, with sales up 4.1% year on year to $180.6 billion. The company expects next quarter’s revenue to be around $167.2 billion, close to analysts’ estimates. Its non-GAAP profit of $0.66 per share was 2.2% above analysts’ consensus estimates.
Is now the time to buy Walmart? Find out by accessing our full research report, it’s free.
Walmart (WMT) Q4 CY2024 Highlights:
- Revenue: $180.6 billion vs analyst estimates of $180.3 billion (4.1% year-on-year growth, in line)
- Adjusted EPS: $0.66 vs analyst estimates of $0.65 (2.2% beat)
- Revenue Guidance for Q1 CY2025 is $167.2 billion at the midpoint, roughly in line with what analysts were expecting
- Adjusted EPS guidance for the upcoming financial year 2026 is $2.55 at the midpoint, missing analyst estimates by 7.7%
- Operating Margin: 4.4%, in line with the same quarter last year
- Free Cash Flow Margin: 3.6%, down from 6.2% in the same quarter last year
- Same-Store Sales rose 4.6% year on year, in line with the same quarter last year
- Market Capitalization: $835.5 billion
Company Overview
Known for its large-format Supercenters, Walmart (NYSE:WMT) is a retail pioneer that serves a budget-conscious consumer who is looking for a wide range of products under one roof.
Large-format Grocery & General Merchandise Retailer
Big-box retailers operate large stores that sell groceries and general merchandise at highly competitive prices. Because of their scale and resulting purchasing power, these big-box retailers–with annual sales in the tens to hundreds of billions of dollars–are able to get attractive volume discounts and sell at often the lowest prices. While e-commerce is a threat, these retailers have been able to weather the storm by either providing a unique in-store shopping experience or by reinvesting their hefty profits into omnichannel investments.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years.
With $681 billion in revenue over the past 12 months, Walmart is a behemoth in the consumer retail sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices. However, its scale is a double-edged sword because there is only so much real estate to build new stores, placing a ceiling on its growth.
As you can see below, Walmart’s sales grew at a tepid 5.4% compounded annual growth rate over the last five years (we compare to 2019 to normalize for COVID-19 impacts) as its store footprint remained unchanged.
This quarter, Walmart grew its revenue by 4.1% year on year, and its $180.6 billion of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 3.5% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 4.1% over the next 12 months, similar to its five-year rate. We still think its growth trajectory is satisfactory given its scale and suggests the market sees success for its products.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
Store Performance
Number of Stores
A retailer’s store count influences how much it can sell and how quickly revenue can grow.
Walmart has kept its store count flat over the last two years while other consumer retail businesses have opted for growth.
When a retailer keeps its store footprint steady, it usually means demand is stable and it’s focusing on operational efficiency to increase profitability.
Note that Walmart reports its store count intermittently, so some data points are missing in the chart below.
Same-Store Sales
The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.
Walmart has been one of the most successful retailers over the last two years thanks to skyrocketing demand within its existing locations. On average, the company has posted exceptional year-on-year same-store sales growth of 5.1%. Given its flat store base over the same period, this performance stems from not only increased foot traffic at existing locations but also higher e-commerce sales as demand shifts from in-store to online.
In the latest quarter, Walmart’s same-store sales rose 4.6% year on year. This performance was more or less in line with its historical levels.
Key Takeaways from Walmart’s Q4 Results
Revenue was just in line, with same-store sales roughly meeting expectations. Looking ahead, the company's full-year EPS guidance for next quarter fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 8.6% to $94.99 immediately following the results.
Walmart underperformed this quarter, but does that create an opportunity to invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
