Wal-Mart (NYSE:WMT) Q4 EPS Tops Expectations, But Shares Still Tank

Wal-Mart (NYSE:WMT) Q4 EPS Tops Expectations, But Shares Still Tank

Wal-Mart Stores, Inc. (NYSE:WMT) reported a 7.9% drop in its consolidated profit for the fourth quarter hurt by a 1.4% drop in its top line. Operational costs climbed 6.2% thus hurting profit growth. However, its adjusted earnings per share nonetheless came in above Wall Street analysts’ expectations. However, the top line fell shy of estimates by over a $1 billion as currency shifts hurt its performance. The retailer was also cautious in its outlook for both the first quarter and full year 2016.

Shares are down 3.7% but well of their lows for the day.

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Guidance Disappoints

Wal-Mart said that its outlook for the fiscal year 2017 was broadly in line with the forecast it provided earlier in 2015. The world’s largest retailer indicated that investments in its associates, stores, and digital capabilities were positioning for a better future. The company also indicated that even as it would continue its investments it would also be focusing on managing expenses.

For the first quarter, the company expects earnings between 80 and 95 cents a share. That means the company is expecting 7.8% – 22.3% lower earnings than the $1.03 a share delivered in the first quarter last year. Similarly, for the full year, the retailer is projecting earnings of $4.00 – $4.30 a share, which represents a 5.9% – 12.5% decline from fiscal year 2016. Analysts are looking for earnings of 90 cents a share and $4.17 a share for the first quarter and fiscal year 2017 respectively.

Q4 Results

Wal-Mart reported net income of $4.57 billion, down 7.9% from $4.97 billion while earnings slipped 6.5% to $1.43 a share from $1.53 a share last year. Adjusted earnings were $1.49 a share, three cents higher than Street analysts’ predictions of $1.46 a share.

The retailer’s revenue also slipped 1.4% to $129.7 billion, which fell short of analysts’ estimates of $130.96 billion. Wal-Mart indicated that on a constant currency basis, its revenue would have advanced 2.2% in the fourth quarter. For the sixth straight quarter, its comparable sales at were up 0.6% while neighborhood market comps grew about 7%. The retailer said that it bought back 39 million shares for about $2.4 billion in the fourth quarter.