Why Walmart’s share price rose 2.7% in April

What happened

It may not seem like much, but walmart (WMT -2.08%) had a pretty good month in April, with its stock price rising 2.7%, according to S&P Global Market Intelligence.

When we consider the fact that the S&P500 was down 8.8% – its worst month since the start of the pandemic – and the Nasdaq Compound was down 13.3% for the month, a return of 2.7% looks pretty good. The nation’s largest retailer is up around 3% year-to-date to May 6.

Image source: Getty Images.

So what

While most of the market was down, including the online retail giant Amazon, Walmart bucked the trend with its positive return in April. As a discount retailer, Walmart is a more affordable option for consumers, especially in times of high inflation. For context, during the market decline of 2008-2010, Walmart returned almost 17%, while the S&P 500 was down 20% over that period, as my colleague Keith Noonan pointed out. in a recent article.

The other thing Walmart has benefited from is a strong dividend, which boosts its total return. It raised its quarterly dividend to $0.56 per share, which was paid in early April. It’s the 49th straight year the company has raised its dividend, putting it one year away from being a dividend king – 50 straight years of dividend increases.

Also in April, Walmart released its annual report for its fiscal year (FY), which ended Jan. 31. It posted revenue of $572 billion, up 2.4% from fiscal 2021, with comp sales in the United States (comparable store) up 6.4% d one year to the next. . The e-commerce business achieved $73 billion in revenue for the year, an 11% increase over the prior year. Over a two-year stack, e-commerce sales grew 90%.

Now what

Walmart’s valuation has fallen in recent months as it currently has a price-earnings ratio of 31, down from 48 at the end of its fiscal year on January 31. It’s still a bit high, but the forward P/E is a more reasonable 22. Moreover, its price-to-sales ratio is also low at 0.75, just about where it has been for about a year.

There’s a lot of uncertainty in the market right now, with rising interest rates and the potential for a recession, but Walmart is built to perform well in times like this, relative to the market, and would provide a good ballast to a portfolio.

Eleanor C. William