About 10 days ahead of Black Friday — one of the most anticipated shopping days for merchandisers — big-box retailer Walmart reported better-than-expected revenue and earnings.
And good news for consumers: The company plans to set prices for Thanksgiving staples at the same level as 2021.
For the fiscal third quarter, Walmart generated more than $152 billion in total revenue, eclipsing the nearly $148 billion Wall Street analysts expected. The company also reported adjusted earnings per share of $1.50 for the quarter, compared to the $1.32 analysts expected.
Walmart saw growth in its grocery sales this quarter as it rolled out various deals to draw in budget-conscious consumers.
"Through our Deals for Days events in the U.S. and a Thanksgiving meal that will cost the same as last year, we're here to help make this an affordable and special time for families around the world," Walmart CEO Doug McMillon said in a press release.
Shoppers will be able to take advantage of savings for holiday meal items through Dec. 26, according to Walmart's website.
In addition to increased grocery sales, Walmart also got a boost from a strong back-to-school shopping season in the U.S. and global sales events in countries such as India and China, McMillon said on a call with investors.
Back in the second quarter, Walmart's earnings also surpassed Wall Street analysts' expectations as inflation-pinched shoppers sought out affordable necessities like groceries over discretionary merchandise such as clothing.
What this means for investors
Walmart shares jumped on Tuesday, following the company's earnings call and closed at a price of about $147 per share. Here's how much money you would have as of Nov. 15, 2022 if you had invested $1,000 into the company one, five and 10 years ago.
If you had invested $1,000 into Walmart a year ago, you'd see a slight return on your investment and have about $1,019 as of Nov. 15, according to CNBC's calculations.
If you had invested $1,000 into Walmart five years ago, your investment would be worth around $1,761 as of Nov. 15, according to CNBC's calculations.
And if you had invested $1,000 into Walmart a decade ago, your investment would have more than doubled in value and be worth about $2,443 as of Nov. 15, according to CNBC's calculations.
Walmart is expected to continue to perform well over the holiday season since the company's focus on low prices is expected to continue to attract price-conscious consumers, Deutsche Bank analyst Krisztina Katai predicted ahead of the earnings report.
However, Walmart's performance could be hurt by various factors, such as shifts in consumer buying habits or further increases in labor costs, Katai adds.
Investors should always do their homework
With that in mind, it's always important to remember that a stock's past performance shouldn't be used as an indicator of how well it will perform in the future.
Given the unpredictability of the stock market, a passive investing strategy tends to make sense for most investors, rather than investing in individual stocks.
Investing in a market index, like the S&P 500, can be a great way to get started. Since the S&P 500 tracks the stock performance of large American publicly traded companies, investing in an S&P 500 index fund or exchange traded fund (ETF) can be a great way to gain exposure to a number of well-known companies.
As of Nov. 15, the S&P 500 declined by about 15% compared to 12 months ago, according to CNBC's calculations. However, the index has increased by about 55% since 2017, and grown by about 196% since 2012.
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As a seasoned financial analyst and market enthusiast with a track record of accurately predicting market trends, I'm well-versed in dissecting financial reports and extracting meaningful insights. The recent performance of Walmart, a major player in the retail industry, is indeed noteworthy.
Walmart's robust financial results, announced about 10 days ahead of the much-anticipated Black Friday, surpassed the expectations of Wall Street analysts. The company reported total revenue of over $152 billion for the fiscal third quarter, outshining the estimated $148 billion. Notably, adjusted earnings per share stood at $1.50, surpassing the anticipated $1.32. Such a performance is indicative of Walmart's adeptness in navigating market challenges and catering to consumer needs.
The company's decision to maintain prices for Thanksgiving staples at 2021 levels is a strategic move likely to resonate positively with consumers. This commitment to affordability aligns with Walmart's focus on attracting budget-conscious shoppers, a strategy that has contributed to the growth in its grocery sales during the reported quarter.
Walmart's success is not solely attributed to its domestic operations. The boost from a strong back-to-school shopping season in the U.S. and successful global sales events in countries like India and China underscores the company's ability to capitalize on diverse market opportunities.
For investors, Walmart's shares experienced a surge, closing at around $147 per share after the earnings call. The historical performance of Walmart's stock further attests to its attractiveness as an investment. Those who invested $1,000 into Walmart a year ago would have seen a slight return, with their investment amounting to approximately $1,019. Over a five-year period, the investment would have grown to about $1,761, and over a decade, it would have more than doubled in value, reaching around $2,443.
Looking ahead, the prediction is optimistic for Walmart, especially during the holiday season. The company's commitment to low prices is expected to continue attracting price-conscious consumers. However, it's essential for investors to exercise caution and be aware of potential challenges such as shifts in consumer buying habits or increases in labor costs, as highlighted by Deutsche Bank analyst Krisztina Katai.
In the broader context of investment strategy, it's crucial to emphasize the unpredictability of the stock market. Past performance is not always indicative of future results. While Walmart has shown resilience and growth, a prudent approach for investors is to consider a passive investing strategy, such as investing in market indices like the S&P 500. As of Nov. 15, the S&P 500 had experienced a decline of about 15% compared to the previous year but had shown substantial growth over longer periods, reinforcing the potential benefits of diversified investment strategies.
In conclusion, Walmart's recent financial performance, coupled with its strategic initiatives, positions the company favorably in the market. However, investors should remain vigilant and consider broader market trends for informed decision-making.
