Shares of Walmart (NYSE:WMT) have gained nearly 9% in the past month and 4.6% in 2022, amid a turbulent period full of news related to geopolitical and inflation-related risks. On Feb. 17 Walmart reported its fourth-quarter FY 2022 earnings report beating expectations. Earnings are among the top catalysts that move stocks and strong earnings are supportive of higher stock prices. Here are the main reasons why WMT stock is a buy now.
Walmart reported EPS normalized of $1.53, a beat by $0.03, and revenue of $151.53 billion, a beat by $1.49 billion.
In Q4 FY 22, revenue of $152.9 billion increased year-over-year 0.5% compared to revenue of $152.1 billion in Q4 FY21, and operating income increased 7.3% to $5.9 billion versus $5.5 billion in the same quarter a year ago. Profitability was a great improvement as net income per common share was $1.29 compared to a net loss of $0.74 per common share in Q4 FY 2021.
Turning to full-year financial results, Walmart reported revenue of $572.8 billion, an increase of 2.4% versus $559.2 billion in FY21. The business model has plenty of momentum as the operating income increased 15.1% to $25.9 billion versus $22.5 billion in FY21. The consolidated net income increased 1.2% to $13.67 billion versus $13.51 billion in FY21.
Among all three segments Walmart operates, Walmart U.S. Walmart International and Sam’s Club, Sam’s Club was the best performer with net sales growth of 15.1%, Walmart U.S. was the second-best performer with a net sales growth of 6.3%, whereas Walmart International was the laggard with a decline of -16.8% in net sales growth.
Investors should also monitor the guidance of the company and two more factors that now are very positive for WMT stock. The company expects in 2023 growth in consolidated net sales of nearly 3% and EPS growth in the mid-single digits. This expectation, if materialized, will show higher EPS growth compared to FY22, and this improved profitability should be reflected in a higher WMT stock price.
Walmart has also increased its quarterly dividend by one cent to 56 cents per share and stated it plans to repurchase $10 billion of its stock in the fiscal year 2023. In FY 2022, Walmart repurchased $9.8 billion in shares and returned $15.9 billion to shareholders in the form of dividends and share repurchases. Reducing shares outstanding is a very positive factor for the valuation of WMT stock.
One last factor to consider is the low Beta of 0.53 for WMT stock. With several interest rate hikes by the Federal Reserve upcoming in 2022 and geopolitical risks remaining present, WMT stock offers a high-quality and relevant low volatile stock that is suitable for all portfolios for generating passive income and diversification purposes.
On the date of publication, Stavros Georgiadis, CFA did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
