Walmart Inc. (NYSE:WMT) stock has pulled lower significantly despite reporting impressive fourth-quarter and full-year earnings. The sell-off came on the company warning that the sales growth momentum experienced in 2020 could slow in 2021.
Robust Sales Growth
The nation’s largest retailer delivered record revenue of $152 billion, helped by its booming e-commerce business. Q4 sales were up 7% year-over-year as comparable store sales increased 8.6%. Online sales were up 70% as more people opted to shop from their homes' comfort and have items delivered at the doorstep. Similarly, Sam’s Club warehouse store sales were up 10.8% as international sales increase 6.3%.
Amid the stellar sales growth, Walmart delivered adjusted earnings of $1.39 a share. In contrast, analysts were expecting earnings per share of $1.51. Full-year adjusted earnings came in at $5.48 a share, up from $4.93 a share reported a year before.
The pullback experienced in the aftermath of the earnings report came at the backdrop of Walmart rallying by more than 30% from the lows registered in March of 2020. Investors seem to have priced a fair amount of good news such that earnings miss triggered a sell-off.
Walmart Outlook
Walmart’s outlook also appears to have spooked investors on the retailer, indicating it expects sales growth to fall overall, including the impact of divestitures. Amid the warning, the retailer still expects sales to rise in the low single digits, with earnings expected to be flat to slightly higher.
Walmart increasing its dividend by 2% also underscores a company growing at an impressive rate and generating sufficient cash flows amid a challenging macro environment. In this case, investors can still count on the retailer to reward them as it continues to enjoy tremendous growth in online sales.
The Big Box retailer has made solid investments to boost its online business expected to be a key driver of the bottom line going by the 70% increase in online sales in the fourth quarter.