Walmart Inc. (NYSE: $WMT) is an American multinational retailer that operates grocery stores, department stores, and hypermarkets across the US. Founded in 1962 by the Walton brothers, it is the largest retailer worldwide, with over ten thousand stores and 380 distribution centers in 27 countries.
The Walton family, which owns around 45% of Walmart stock, recently sold a $1.5 billion stake in the multinational retailer.
Walmart Stock Soared On Stellar Q4 Results
On Tuesday, February 20, 2024, Walmart released its Q4FY24 results, reporting better-than-expected numbers. The retailer reported sales of $173.4 billion in Q4 and an EPS of $1.80, both above expectations.
It also announced it would buy television maker Vizio for $2.3 billion in cash. Additionally, it increased its dividend payout by 9% to $2.49 per share for the upcoming fiscal year. The dividend increase gives WMT stock a yield of 1.5%, higher than most of the 16 companies on the S&P 500 with a market cap of over $400 billion.
Walton Family See Huge Gains
Following the release of the Q4 results, WMT stock soared 6%, the largest single-day gain since November 15, 2022, and a new all-time high. The biggest beneficiaries of the gain were the Walton family, descendants of Sam and Bud Walton.
They own around 45% of Walmart’s stock, making them one of the wealthiest families in the world. Thanks to the surge, their net worth saw a single-day gain of around $7.6 billion.
Strategic Sale
Following the huge gain, the Walton family sold a $1.5 billion worth of WMT stock. The sale was made after markets closed on Friday, February 23, 2024.
Their timing of the sale was quite strategic. Given the company’s stellar Q4 performance that sent the stock soaring, the sale could be interpreted in several ways. It could signal that the Waltons believe the stock has peaked.
Another reason for the sale could be asset diversification as part of a wealth management strategy. The new all-time high achieved by the stock meant that their wealth was heavily weighted on one stock. Regardless of the reason, the move will be examined closely by investors.
Walmart Implements Stock Split
Following the release of the Q4 results, with the stock reaching record highs, Walmart’s board enacted its previously announced 3-for-1 split of the stock on Friday, February 23, 2024, after markets closed. The split will make the stock more affordable for new investors.
Walmart Stock Performance
Following the split on Friday, after markets closed, WMT stock is trading at $59.51 per share, gaining 1.70% as of 11:38 AM EST on Monday, February 26, 2024. The stock’s dividend yield is now 4.5%, with a payout of $2.49 per share.
After the split, WMT stock has gained 12.1% Year-to-date. Over the past 12 months, the stock has gained 24.12%, compared to the 27.79% gain of the S&P 500 in the same period. WMT stock is valued above its 50-day and 200-day moving averages of $54.50 and $53.10, respectively.
WMT Stock Forecast
After the release of the Q4FY24 results, Morgan Stanley retained its overweight rating for WMT stock. According to the most recent forecasts, WMT stock is rated a strong buy. The analysts forecast an average price of $65 for the stock, with a high of $76 and a low of $54. WMT stock’s average price forecast is a 9.23% upside.
Should You Buy WMT Stock?
There is a strong case for why you should consider WMT stock. For one, Walmart is the world’s biggest retailer by revenue. It has unpatrolled advantages regarding economies of scale and cost advantages. Additionally, it has a strong flow, which makes it highly resilient even during economic headwinds.
Income investors will also find WMT stock quite lucrative. Its current yield is 4.5%, one of the highest amongst major stocks listed on the S&P 500 index. In 2023, the company joined the exclusive club of divided kings, which are companies that have announced a 50th consecutive annual dividend increase.
One of the biggest knocks against WMT stock is that it is expensive. Its forward P/E ratio is 24.81, higher than in the early 90s when the company’s growth prospects were more lucrative.
Some investors might also be concerned about the company’s near-term growth prospects. In its Q4 results, Walmart forecasted net sales would grow 3-4% on an FX-natural basis.
Despite its shortcomings, WMT stock is still a great pick amid economic headwinds. It has the moat needed to overcome any near-term difficulties. Consequently, it is an excellent option for long-term investors.
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