i_SVG Created with Sketch.

Capital Markets Elite Group is not a registered U.S. broker-dealer. It does not accept a U.S. Person as a client if that person was solicited by Capital Markets Elite Group. (The definition of “U.S. Person” is here.) Capital Markets Elite Group will rely on a certification from a potential customer that the potential customer either is not a U.S. Person or has not been solicited, directly or indirectly, by Capital Markets Elite Group and has not been induced by Capital Markets Elite Group to engage in securities transactions. In particular, they must certify that they were directed to this website by someone other than Capital Markets Elite Group. They must also certify that they understand that they will not be protected by U.S. laws, regulations and supervisory structures applicable to broker-dealers registered in the U.S. and they do not expect such protections to apply. You should give these certifications only if they are true. If you wish to proceed to the website knowing that, please click “Continue” below. Otherwise click “Leave Website”

Leave Website
Start Trading

Walmart Shares Tank the Most Since 1987

Ticker Symbol: WMT

Walmart shares were down close to 12% in midday trading after the company released a poor earnings report that generally missed Wall Street’s expectations. The pullback was the sharpest intraday decline in the company’s history since 1987.

Moreover, management said earnings were likely to drop 1% for fiscal 2022, after guiding towards a mid-single digit increase three months ago. The sharp change in commentary from the company comes in light of the sharply rising inflation rate in the U.S., especially in food prices.

The company vowed in its earnings call with analysts and investors to raise prices in order to guard against declining margins, but that it would still attempt to be the lowest cost retailer in most of its markets.

In addition, C.E.O. Doug McMillion indicated that surging fuel and logistics prices, caused partly by the spike in oil prices after Russia invaded Ukraine, were responsible for the earnings miss in the first quarter. The company reported an adjusted earnings per share of $1.30, missing the average analyst estimate of $1.48 and $1.69 in the 1Q 2021.

Still, the company reported a solid top-line result, posting comparable same store sales of +4% versus an estimate of +2.25%. Sam’s Club U.S. comparable sales, excluding gas, were up 10.2%, while the estimate was for a growth of 5%.

Aggregate revenue came in at $141.57 billion, up 2.4% year over year, beating the estimated $139.1 billion from analysts. Despite these revenue beats, bottom-line results were unexpected. The current unusual environment around pricing pressures could continue to pressure the company’s margins going forward.

Furthermore, sales growth in China was also lower than expected in the first quarter, mainly due to the resurgence of the pandemic in the country. Notwithstanding these poor results, Walmart should be well positioned to emerge from the current challenges as the company’s logistics and supply-chain management systems are world-class in the retail sector.

Additionally, the current pull-back in the share creates a good buying point for new investors. Walmart’s market share in the U.S. remains strong, and the company’s robust balance sheet should shelter it from any further slowdown in the global economy.

This content is provided for general information purposes only and is not to be taken as investment advice nor as a recommendation for any security, investment strategy or investment account.