Wal-Mart Earnings: Margins Shrink Again, but Profit and Revenue Climb

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Wal-Mart Stores Inc. (NYSE:WMT) reported its results for the third quarter. Wal-Mart Stores operates Walmart discount stores, supercenters, Neighborhood Markets and Sam’s Club locations in the United States.

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Wal-Mart Stores Inc. Earnings Cheat Sheet

Results: Net income for Wal-Mart Stores Inc. rose to $3.63 billion ($1.08 per share) vs. $3.34 billion (96 cents per share) in the same quarter a year earlier. This marks a rise of 9% from the year-earlier quarter.

Revenue: Rose 3.4% to $113.93 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Wal-Mart Stores Inc. was about in line with expectations as the mean analyst estimate of $1.07 per share. It beat the average revenue estimate of $110.5 billion.

Quoting Management: “We’re very pleased with our financial performance for the third quarter and the dedication and hard work of our associates serving Walmart customers and communities around the world,” said Mike Duke, Wal-Mart Stores, Inc. president and chief executive officer. “Earnings per share were $1.08, which represents an 11.3 percent increase over the third quarter last year.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 0.1 percentage point to 24.9% from the year-earlier quarter. In that span, margins have contracted an average of 0.3 percentage point per quarter on a year-over-year basis.

The company has now seen its net income increase for three consecutive quarters. In the second quarter, net income rose 5.7% and in the first quarter, the figure rose 10.1%.

Revenue has increased for four consecutive quarters. Revenue increased 4.5% to $114.3 billion in the second quarter. The figure rose 8.5% in the first quarter from the year earlier and climbed 5.9% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company has now beaten analyst estimates for three quarters in a row. It beat the mark by one cent in the second quarter and by 5 cents in the first quarter.

Looking Forward: Next quarter’s results are expected to be more favorable for the company. Over the past sixty days, the average estimate for the fourth quarter has reached $1.59 per share, up from $1.58. For the fiscal year, the average estimate has moved up from $4.91 a share to $4.92 over the last sixty days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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