Shares of Wal-Mart (WMT) are rising more than 2.5% in the early trading session Tuesday after the world's largest retailer reported fiscal fourth-quarter earnings that topped Wall Street’s estimates, though revenue fell short of what analysts were expecting due to foreign exchange headwinds, among other factors.
In the three months that ended January, the Bentonville, Arkansas-based company reported a net income of of $3.76 billion, or $1.22 per share, which was down about 18% year over year due to investments in e-commerce and stores. On an adjusted basis, when taking out one-time gains and costs, earnings came to $1.30 per share, which beat Thomson Reuters estimates by a penny.
Fourth quarter revenue came to $130.94 billion, which grew 1% year over year, but missed Street forecast by about $300 million. Wal-Mart said its domestic same-store sales for the fourth quarter were up 1.8%, above consensus of 1.3%. The company benefited from a combination of factors, including a strong holiday shopping season during which its U.S. business accelerated as traffic rose 1.4% year over year.
Revenue from its e-commerce segment was also notably strong. Wal-Mart said U.S. e-commerce revenue surged 29% year over, while gross merchandise volume rose 36%. In an e-commerce industry dominated by Amazon (AMZN), Wal-Mart's digital sales, which grew also 21% in the third quarter, has become the company’s focus. With an almost 30% rise this quarter, it would seem the company’s investments, including its $3.3 billion acquisition of Jet.com (closed during Q3), has begun to pay off.
“We're moving with speed to become more of a digital enterprise and better serve customers,” CEO Doug McMillon said in a statement.
In terms of guidance, Wal-Mart said it expects fiscal year 2018 per-share earnings to be in the range of $4.20 to $4.40. For its first quarter, the company forecasts earnings in the range of 90 cents to $1 per share, compared to Wall Street estimates of 96 cents. Walmart also raised its dividend by 2% to $2.04 per share.
Wal-Mart stock has risen about 0.36% this year, compared with 5% rise in the S&P 500 index. While the shares have underperformed the market over the past year, rising just 7%, Wal-Mart is making the sort of moves, such as its e-commerce gains in particular, that can push the stock higher in the quarters and years ahead.
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