Walmart Stock Tanks on Earnings Miss

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On Tuesday, February 20, 2018, investors in Walmart stock had a rough day, to say the least. The retail giant failed to hit earnings expectations for the the fourth quarter. The consensus estimate was $1.37 earnings per share, but Walmart only earned $1.33 per share for the quarter.

This earnings miss was also coupled with an additional negative development. Online sales only increased 23 percent for the quarter, which was down from the 50 percent increase in the third quarter of the fiscal year. The other numbers were not terribly bad. For example, same-store sales increased by 2.2 percent during the quarter (1.6 percent in the US), and the average ticket per shopper grew by 1 percent.

Revenue came in above the estimate of $134.9 billion at $136.3 billion. The lower earnings per share number was impacted by restructuring charges, the writing off of some debt and an impairment from discontinuing some real estate projects.

The earnings miss hurt shareholders, as shares of Walmart stock dropped by more than 10 percent in trading on Tuesday after the report came out. Shares declined by $10.65 in dollar terms down to a close of $94.11. Walmart stock had been on quite a run since a lowered growth expectations caused a major decline in late 2015. Shortly after this development, shares had nearly doubled off their late 2015 lows.

Overall, Walmart realized revenue of $500.3 billion in fiscal year 2017. This was 3 percent higher than the number for the previous year. Additionally, investments into e-commerce have been paying off in recent months. The company saw a 44 percent increase in this segment of its business on a year-over-year basis.

While shareholders took quite a haircut due to the earnings miss, Walmart has been quite generous to shareholders over the past year. The company returned $14.4 billion via dividends and buybacks over the past year. The company also expects that shareholders will see a benefit of around $2 billion due to more advantageous tax rate in the coming year that will come as a result of the recent federal tax reform efforts.

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