Impact of 3Q results
Shares of retail giant Wal-Mart Stores (WMT) fell 3.1% on November 17 in reaction to the company’s fiscal 3Q17 (ended October 31, 2016) results. Walmart exceeded the consensus analysts’ earnings estimate for fiscal 3Q17 but missed the revenue estimate. On a YTD (year-to-date) basis, Walmart’s stock price has risen 11.5% as of November 18.
Stock ahead of peers
As of November 18, Walmart’s stock has outperformed major peers on a YTD basis. The stock prices of Target (TGT), Costco Wholesale (COST), Kroger (KR), Dollar Tree (DLTR), Dollar General (DG), and Whole Foods Market (WFM) have risen by 3.6%, -5.8%, -18.7%, 3.9%, 6.2%, and -6.9%, respectively, on a YTD basis.
Walmart’s stock has also outperformed the S&P 500 Index, which has risen 8.4% YTD. Notably, Walmart constitutes 5.9% of the holdings of the Consumer Staples Select Sector SPDR Fund (XLP).
As of November 18, Walmart has generated total shareholder returns of 14.3%—higher than the 8.9% in total returns generated by the S&P 500 Index. Remember, total shareholder returns take into account stock price appreciation as well as dividends and other income paid over a certain period.
In fiscal 3Q17, Walmart returned $1.5 billion to its shareholders through dividends. The company also rewards its shareholders through share repurchases. (Share buybacks or repurchases enhance earnings per share by bringing down the share count.) In fiscal 3Q17, Walmart made share repurchases amounting to $1.4 billion.
In this series on Walmart’s fiscal 3Q17 results, we’ll discuss the company’s earnings, revenue, and margins. We’ll also discuss the key growth drivers behind the company’s strong e-commerce sales growth in the third quarter. The series will conclude with a discussion on the company’s valuation.
Now let’s take a closer look at Walmart’s fiscal 3Q17 earnings.