Morningstar | WMT Updated Star Rating from 19 Feb 2019
With the wide-moat retailer posting a solid end to fiscal 2019, we do not plan to make a large change to our $94 fair value estimate for Walmart. Strong domestic performance drove full-year results that we believe are consistent with our view that the firm enjoys enduring competitive advantages that should allow it to deliver returns even as retail changes. We anticipate leaving our long-term forecast largely intact (low- to mid-single-digit percentage revenue growth, 4% adjusted operating margins, on average, over the next decade).Walmart saw 3% total revenue growth, to $514 billion, consistent with our forecast, against adjusted diluted EPS of $4.91, ahead of our $4.84 mark. Management reiterated that it expects a low-single-digit percentage decline in adjusted EPS in fiscal 2020, near our 5% pre-announcement forecast dip, incorporating 2.5%-3% U.S. comparable-store sales growth (excluding fuel; we call for 3%).
Fourth-quarter results saw broad strength, with comparable-store sales growth excluding fuel of 4% and 3% for the U.S. and Sam's Club units, respectively, and each of the firm's four largest international markets posting constant-currency comparable sales growth. U.S. sales were propelled by e-commerce as Walmart continues efforts to expand its omnichannel presence that we believe are prudent. While it has taken longer than expected for Walmart to lift digital sales' profitability, which continues to be dilutive, we believe it should be able to use its store network and procurement strength to deliver omnichannel results globally as cost leverage builds and it optimizes its assortment mix. Although regulatory changes in India pose significant challenges for its Flipkart unit (the alterations keep e-commerce companies from selling products from companies they are invested in and prevent exclusive or preferential agreements with vendors), we believe Walmart can still apply the company's digital expertise globally, accelerating its omnichannel transition.
Walmart is engaged in global operations of retail, wholesale and other units, as well as eCommerce, located throughout the U.S., Africa, Argentina, Canada, Central America, Chile, China, India, Japan, Mexico and the U.K. The company's operations are conducted in three reportable segments: Walmart U.S., which is a mass merchandiser of consumer products, operating under the Walmart and Walmart Neighborhood Market brands, as well as walmart.com, jet.com and other eCommerce brands; Walmart International, which includes various formats divided into retail, wholesale and other categories; and Sam's Club, which is a membership-only warehouse club that also operates samsclub.com.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.