- Walmart (WMT) stock outperformed the S&P 500 index in this year’s first quarter.
- The company continues to innovate and expand into new areas ranging from digital ads to home deliveries.
- Shareholders benefit from Walmart’s consistent returns, increasing dividend payouts and a $10 billion stock buyback program.
Walmart (NYSE:WMT) stock remains a reliable blue-chip stock and solid long-term investment.
While not flashy or exciting, the world’s biggest retailer continues to deliver consistent returns to investors. Through the first quarter of this year, WMT stock is up 4%. That compares to a 5% year-to-date decline for the benchmark S&P 500 index.
Over the last 12 months, Walmart’s stock has gained 11%. Not spectacular, but steady and strong in the wake of market turmoil and economic uncertainty.
As a seller of consumer staple products ranging from groceries to diapers, Walmart is also largely recession-proof and a stock that can be counted on to perform well in good times and bad.
| WMT | Walmart Inc. | $151.04 |
Continued Growth
Although it is an established and dominant company with more than 10,500 stores and 2.3 million employees worldwide, Bentonville, Arkansas-based Walmart remains in growth mode. In mid-March the company announced plans to hire 50,000 new employees in the U.S. by the end of April as it pushes into new business categories that includes online shopping and advertising.
The new hires are to include personal shoppers, delivery drivers, and data scientists, among others, says Walmart, which remains the largest private sector employer in America with more than 1.5 million people on its payroll nationwide.
Walmart is focusing on growing its e-commerce business, as well as its home delivery service and online ad business as it increasingly competes against both Amazon (NASDAQ:AMZN) and Google parent company Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) as well as traditional retailers such as Target (NYSE:TGT).
Additionally, Walmart has announced that it is opening new global technology hubs in Atlanta, Georgia and Toronto, Canada. The tech hubs will employ software developers and product managers, among others, and are part of a $3.5 billion investment the company is making to improve its online operations and e-commerce offerings.
Strong Earnings
Walmart also continues to diversify its in-store offerings at locations around the world. Today, the company sells as many groceries as clothes to consumers, who continue to flock to its stores for the convenience and low prices. The company’s most recent fourth quarter results showed that it topped Wall Street expectations despite ongoing headwinds from the Covid-19 pandemic, global supply chain issues, and inflation that’s running at a 40-year high.
Walmart reported Q4 earnings per share (EPS) of $1.53 compared to $1.50 that analysts had expected. Revenue in the fourth quarter came in at $152.87 billion versus $151.53 billion that had been forecast.
Walmart’s same-store sales in the U.S. climbed 5.6% year-over-year in the fourth quarter, and the company’s e-commerce sales in the U.S. rose 1% from a year earlier, bringing the two year growth for e-commerce revenue to 70%. WMT stock rose 4% immediately following the Q4 report.
Looking ahead, Walmart said it expects total sales to rise 4% and same-store sales in the U.S. to grow more than 3% this year. The company’s new ventures include the aforementioned ad business and its “InHome” grocery delivery business. Walmart is achieving success with these new categories, announcing that its advertising business called “Walmart Connect” has grown to $2.1 billion in annual revenues, up 130% from 2020.
In announcing its latest earnings, Walmart also raised its dividend by one cent to 56 cents a share, and said it plans to repurchase $10 billion of its own stock this year, both of which offer positive incentives to investors.
Buy WMT Stock
Walmart isn’t sexy or exciting. And its stock isn’t likely to skyrocket anytime soon. But the share price isn’t likely to plunge either.
Walmart remains a consistent winner. It’s a reliable blue-chip stock and essential component of the Dow Jones Industrial Average that tracks 30 of the biggest publicly traded companies in America. And while it has a stable, profitable retail business that is global in scope, the company continues to innovate, expand and seek market share in new business segments.
This approach has led to strong financial results and steady share price appreciation. Shareholders will continue to benefit from Walmart’s consistent returns, dividend payout and buyback program. WMT stock is a buy.
On the date of publication, Joel Baglole held a long position in GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
