Walmart Gains 7% After Raising Full-Year Guidance

Key Insights

• Walmart stock rallies after the release of the third-quarter report. 
• Walmart announced a new $20 billion buyback program. 
• Other discount store stocks are also moving higher. 

Walmart Stock Gains Ground As Traders React To The New Buyback Program

Walmart gained 7% in today’s trading session as traders reacted to the strong quarterly report. The company reported revenue of $152.8 billion and adjusted earnings of $1.50 per share, beating analyst estimates on both earnings and revenue.

Walmart announced a new $20 billion stock buyback program, providing significant support to the stock. This program will replace the existing authorization, which had $1.9 billion remaining at the end of the third quarter.

The strong dollar hurt the results of the company’s international segment. However, Walmart International net sales managed to grow by 7.1% despite the strong dollar.

Walmart has also announced that it has agreed to a $3.1 billion opioid settlement framework design to resolve substantially all opioid lawsuits and potential lawsuits.

Walmart raised its full-year outlook due to the strong performance in the third quarter. The company expects consolidated net sales growth of 5.5%.  Consolidated adjusted operating income is expected to decline by 6.5% – 7.5%, compared to the previous guidance which called for a decline of 9% – 11%.

Traders Rush To Buy Discount Store Stocks

Walmart’s results provided significant support to discount store stocks. Big Lots is up by 6%, while Dollar General is gaining more than 3.5%. Costco, Dollar Tree, and Target are up by 3%.

Most discount stores have outperformed the broader market this year. Recession worries provided some support to defensive sectors, which was bullish for discount store stocks.

It should be noted that Walmart is trading just 8% below its all-time high levels, so demand for the stock remains strong. The strong earnings report and the new buyback program have the potential to push the stock closer to the all-time high levels.

For a look at all of today’s economic events, check out our economic calendar.