Walmart Inc. has seen a surge in its stock price, reaching a record high, following strong earnings and its acquisition of smart-TV maker Vizio Holding Corp. The discount retail giant reported an earnings beat and confirmed a $2.3 billion deal to buy Vizio. Walmart’s U.S. Chief Revenue Officer, Seth Dallaire, expressed confidence in Vizio’s ability to provide great viewing experiences at attractive price points and enable a profitable advertising business.
Under the terms of the deal, Walmart will pay $11.50 for each Vizio share outstanding, representing a 20.7% premium above Friday’s closing price. Although the deal is expected to slightly reduce earnings in the near term due to transaction-related costs, such as employee retention and technology integration, investors responded positively to the news. Walmart’s stock climbed 2.2% in premarket trading, while Vizio shares shot up 15.3%.
While the Vizio acquisition garnered positive attention, Walmart did provide a current-quarter profit outlook below expectations. However, the company reported strong financial results for the quarter ending January 31. Net income fell to $5.49 billion or $2.03 per share, from $6.28 billion or $2.32 per share in the same period last year. Excluding nonrecurring items, adjusted earnings per share of $1.80 beat the FactSet consensus of $1.64. Total revenue grew 5.7% to $173.39 billion, surpassing the FactSet consensus of $170.85 billion.
Walmart’s success extended to its same-store sales, with U.S. stores experiencing a 4.0% growth, exceeding the FactSet consensus of 3.3% growth. Sam’s Club same-store sales also rose by 3.1%, surpassing expectations of a 2.7% increase.
Looking ahead, Walmart provided guidance for the first quarter, projecting adjusted earnings per share of $1.48 to $1.56, slightly below the FactSet consensus of $1.60. The company also provided full-year adjusted EPS guidance of $6.70 to $7.12, compared to expectations of $7.06. Despite the slightly lower guidance, Walmart raised its annual dividend rate by 9.2% to $2.49 a share, marking the largest dividend boost in over 10 years.
Following a three-for-one stock split on February 26, Walmart’s new annual dividend rate will be 83 cents a share, with a quarterly dividend of 20.75 cents a share. Shareholders of record on March 15 will receive the new dividend, which will be paid out on April 1. Based on Friday’s closing price of $170.36, the new annual dividend rate implies a dividend yield of 1.46%, slightly higher than the implied yield for the S&P 500 index.
Investors have responded positively to Walmart’s recent performance, with the stock rallying 9.7% over the past three months. This growth outpaced the Dow Jones Industrial Average, which advanced 9.9% over the same period.
Walmart’s strong earnings and acquisition of Vizio have positioned the retail giant for continued success in the coming months. Despite slightly lower profit outlooks, the company’s ability to deliver strong financial results and raise its dividend demonstrates confidence in its future prospects. Investors can expect Walmart to maintain its position as a retail powerhouse and continue to deliver value to its shareholders.
