Walmart (WMT) is the worst Dow Jones stock Thursday, down nearly 6% at last check, after the retail giant reported earnings. While the company beat top- and bottom-line expectations for its fiscal 2025 fourth quarter and hiked its dividend again, it issued a weaker-than-expected profit forecast for the year ahead.
In the three months ending January 31, Walmart's revenue increased 4.1% year over year to $180.6 billion, boosted by a 16% rise in global e-commerce sales. Its earnings per share (EPS) were up 10% from the year-ago period to 66 cents.
"Our team finished the year with another quarter of strong results. We have momentum driven by our low prices, a growing assortment, and an e-commerce business driven by faster delivery times," said Walmart CEO Doug McMillon in a statement.
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McMillon added that Walmart is gaining market share, boasts a "healthy" top line and is "great shape with inventory." The company will "stay focused on growth, improving operating margins, and strengthening return on investment as we invest to serve our customers and members even better," he noted.
The results beat analysts' expectations. Wall Street was anticipating revenue of $180 billion and earnings of 64 cents per share, according to CNBC.
Walmart also said that comparable-store sales at Walmart U.S. and Sam's Club rose 4.6% and 6.8%, respectively, excluding fuel.
However, sentiment turned negative toward Walmart when it provided its outlook. For its fiscal year 2026, the company expects revenue growth in the range of 3% to 4% and earnings per share between $2.50 to $2.60. Analysts were forecasting earnings of $2.76 per share.
For its fiscal first quarter, Walmart anticipates revenue growth of 3% to 4% and earnings of 57 cents per share to 58 cents per share.
Walmart's outlook "seems to imply near-term weakness in consumer spending with the first quarter of 2025 being the worst period and then some recovery later in the year," says Brian Mulberry, client portfolio manager at Zacks Investment Management.
And the Federal Reserve's plans to keep interest rates unchanged for the foreseeable future "could have the short-term effect of deferring consumer spending until rates do move lower," he adds.
Walmart hikes its dividend
In a separate release, Walmart said its board of directors approved a 13% increase to its quarterly dividend. This marks the 52nd straight year that the retailer has raised its payout, making it one of the best dividend growth stocks.
Why is dividend growth important? "Shares in companies that raise their payouts like clockwork decade after decade can produce superior total returns (price change plus dividends) over the long run," writes Dan Burrows, senior investing writer at Kiplinger, in his feature, "Best Dividend Stocks to Buy for Dependable Dividend Growth." Additionally, it signals confidence to investors that the company's financials are sound.
Is Walmart stock a buy, sell or hold?
Heading into Thursday's session, Walmart was outperforming the broad market for the year to day, up 15% on a total return basis (price change plus dividends) vs the S&P 500's nearly 5% gain. And Wall Street remains bullish on the blue chip stock.
According to S&P Global Market Intelligence, the average analyst target price for WMT stock is $107.25, representing implied upside of more than 10% to current levels. Additionally, the consensus recommendation is a Buy.
Financial services firm Argus Research is one of the more bullish outfits on the consumer staples stock with a Buy rating and a $115 price target.
"As we see it, Walmart is doing a superb job in winning customers and it is improving return on assets and return on investment," says Argus Research analyst Christopher Graja. "Walmart stands out when people need to save money, and the company is firing on all cylinders in our opinion," the analyst notes, adding that WMT is "gaining market share, particularly among higher-income shoppers."
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