Walmart (NYSE:WMT) stock was trending lower on Thursday after the retailer posted fourth quarter earnings that met expectations.
However, investors were disappointed with the retail giant’s outlook for the current fiscal year. The stock price was down about 6.5% on Thursday, trading at around $97 per share. It’s a bump in the road for a stock that has returned 66% over the past 12 months and is still up nearly 8% despite Thursday’s dip.
However, dividend investors were pleased as Walmart raised its dividend by 13% to 23.5 cents per share, up from 20.75 cents per share. It is the largest dividend increase by the firm in a decade, officials said.
It also marks the 52nd straight year that Walmart has increased its annual dividend payout, which will go from 83 cents per share in 2024 to 94 cents per share this year.
That makes Walmart one of only 54 Dividend Kings, which are stocks that have raised their dividend for 50 years in a row or more. Further, only 12 other stocks in the consumer staples sector have increased their dividend annually for 52 years or more in a row.
“We’re proud to be increasing our annual dividend for the 52nd consecutive year,” John David Rainey, CFO at Walmart, said. “Dividends are part of our balanced capital returns approach and this year’s 13 percent increase is a sign of our continued confidence in sustained business performance.”
Weaker than expected outlook
Walmart barely beat earnings and revenue estimates in its fiscal fourth quarter ended January 31.
The retailer generated $180.6 billion in revenue in the quarter, up 4.5% year over year. It was slightly ahead of estimates of $180.0 billion.
Operating income was $7.9 billion, which was up 8.3% compared to the same quarter a year ago. Adjusted earnings were 66 cents per share, up 10% year over year and better than estimates of 64 cents per share.
However, the outlook for the current fiscal year, Walmart’s fiscal 2026, was somewhat disappointing.
Net sales are expected to rise 3% to 4% this year, which is below the 5% growth clip last year. This was basically on par with Wall Street analyst projections. But earning expectations fell short of estimates. Walmart expects adjusted earnings of $2.50 to $2.60 per share in fiscal 2026, which is less than the $2.76 per share analysts anticipated. First quarter EPS also fell short. Walmart is targeting 57 cents to 58 cents per share, which is below expectations of 64 cents per share.
“Our outlook assumes a relatively stable macroeconomic environment but acknowledges that there are still uncertainties related to consumer behavior and global economic and geopolitical conditions,” Rainey said on the earnings call.
Rainey said the company was confident it could navigate the uncertainties, including tariffs.
Analysts have a median price target of $110 per share for Walmart, which assumes a 13% increase over the next 12 months.
Walmart stock is a bit overvalued, trading at 42 times earnings. As the CFO said, Walmart has always been able to navigate most fiscal environments and typically does well when the economy is sluggish. It’s a good long-term stock, but the valuation should come down a bit. Today’s drop will bring it closer to a reasonable buy zone.