Financial numbers can show Walmart (WMT) can survive and thrive in today’s economy. The discount giant is growing and making money in our age of inflation and turmoil.
For example, Walmart’s quarterly revenues grew from $140.525 billion on 31 October 2021 to $152.813 billion on Halloween 2022. Hence, Walmart’s quarterly revenues grew by $12.288 billion a year. Moreover, those revenues will keep growing. Walmart’s quarterly revenue growth rate rose from 4.32% on 31 October 2021 to 8.74% on 21 October 2022, Stockrow claims.
Similarly, Walmart’s quarterly gross profit grew from $35.502 billion on 31 October 2021 to $37.2 billion on 31 October 2022. However, Walmart’s quarterly operating income fell from $5.792 billion on 31 October 2021 to $2.695 billion on 31 October 2022.
How Inflation threatens Walmart (WMT)
I suspect Walmart’s quarterly income fell because inflation is eating into Walmart’s quarterly profits. In particular, energy inflation threatens Walmart (NYSE: WMT).
To keep its shelves full, Walmart operates 9,000 to 10,000 semi-tractors in the United States. Those semi-tractors burn diesel fuel. US diesel fuel prices rose by $1.509-a-gallon between November 2021 and November 2022, the US Energy Information Agency (EIA) estimates.
Hence, a large portion of Walmart’s profits are going into the fuel tanks. Walmart management is trying to eliminate that threat. For example, Walmart plans to convert from diesel to electric semis. For example, Walmart has ordered 130 Tesla (TSLA) semis for its Canadian operations.
Walmart is also testing electric semis from Nikola and Freightliner. Additionally, the company is experimenting with natural gas and hydrogen vehicles. In particular, Walmart is trying to electrify the yard trucks that move trailers its facilities.
How Much Money is Walmart Making?
Walmart (WMT) is generating far more cash. For example, Walmart’s quarterly operating cash flow rose from $3.868 billion on 31 October 2021 to $6.458 billion on 30 October 2022.
The quarterly operating cash flow hit a high of $12.998 billion on 31 July 2022. I think Walmart’s quarterly operating cash flow grew because of inflation. To explain, Walmart takes in more cash because of inflation. Moreover, more people shop at Walmart in search of lower prices.
However, Walmart’s quarterly ending cash flow rose from -$6.715 billion on 31 October 2021 to -$2.335 billion on 31 October 2022. The quarterly ending cash flow rose to $11.882 billion on 31 March 2022.
Walmart has less Cash and More Debt
Thus, Walmart (WMT) is generating more cash but keeping less cash. For example, Walmart’s cash and short-term investments fell from $16.111 billion on 31 October 2021 to $11.587 billion on 31 October 2022.
Walmart also pays a lot in debt. Walmart reported a quarterly financing cash flow of -$4.181 billion on 30 October 2022. The quarterly financing cash flow fell from -$6.554 billion on 30 October 2021.
Predictably, Walmart is accumulating more debt. The total debt rose from $57.597 billion on 31 October 2021 to $65.380 billion on 31 October 2022. I suspect Walmart is using debt to cover increased inflation costs.
Is Walmart (WMT) Growing?
There is significant growth at Walmart (WMT). For example, Walmart’s net sales worldwide grew from $519.93 billion in 2020 to $555.23 billion in 2021, Statista estimates. Impressively, the worldwide net sales could grow to $567.76 billion in 2022.
However, Walmart is struggling online. Visits to Walmart.com fell from 563 million in December 2021 to 387.4 million in April 2022, Statista estimates. However, visits to Walmart.com rose to 407.8 million in May 2022. I attribute the drop in online visits to the Christmas shopping frenzy.
Additionally, Walmart’s total assets grew from $244.851 billion in October 2021 to $247.656 billion in October 2022. Hence, Walmart is adding value as it struggles to retain cash.
Finally, Walmart’s share price grew from $142.63 on 29 November 2021 to $153.31 on 28 November 2022. Hence, Walmart’s shares are retaining value, which is impressive in today’s market. Walmart shares hit a high of $159.63 on 20 April 2022.
What Value does Walmart (WMT) have?
I think Walmart’s greatest value is its impressive footprint. In November 2022, Walmart operated 10,586 stores under 46 banners in 24 countries.
In detail, Walmart operated 4,720 Walmart stores and 600 Sam’s Club stores in the United States. The company operates 5,266 stores outside the US.
Additionally, Walmart operates 31 fulfillment centers dedicated to e-commerce in the United States. Plus, Walmart claims its four next-generation fulfillment centers can serve 75% of the US population with next-day or two-day shipping. They claim all 31 of Walmart’s fulfillment centers can reach 95% of the US population with next or two-day shipping.
Walmart is experimenting with an “intelligent fulfillment center” in Pedricktown, New Jersey. Walmart and KNAPP are developing a high-density automated storage center in Pedricktown. They hope to streamline a 12-step fulfillment process to five steps in Pedricktown and double the center’s storage capacity.
Walmart’s Impressive Distribution Network
KNAPP AG is an Austrian company that develops one-stop intelligent automation solutions. The KNAPP Group automates fulfillment centers with rack-line systems and automatic storage centers. KNAPP claims this enables one-touch picking of goods and speeds up the process.
In addition, the fulfillment centers Walmart operates 210 distribution centers to distribute goods. To move the merchandise, Walmart operates a fleet of 9,000 semi-tractors, and 80,000 trailers and employs 11,000 drivers.
Walmart claims a distribution center can unload and ship over 200 trailers a day. They claim a distribution center supports 90 to 100 stores in a 150-square-mile radius. Impressively, Walmart maintains six disaster distribution centers in the United States that provide emergency supply.
Walmart is also experimenting with a high-tech consolidation center in Colton, California, outside San Bernardino. They claim the Colton center can move three times more freight volume than a typical center.
Is Walmart (WMT) a Value Investment?
I think Walmart (WMT) is a value investment at $153.31, even with inflation. Walmart is a value because it is growing and generating more cash.
Plus, Walmart pays a nice dividend. Walmart has scheduled nine 56₵ quarterly dividends between 17 February 2023 and 16 February 2024. Overall, Walmart offered a $2.24 forward dividend and a 1.46% forward dividend yield on 25 November 2022.
If you are looking for a retail dividend stock that is capable of growth. I think Walmart (NYSE: WMT) is worth examining.
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