Walmart Earnings Recap: Investors Cheer $2.3 Billion Vizio Deal
Walmart Earnings Recap: Investors Cheer $2.3 Billion Vizio Deal
Walmart stock surges after its positive Q4 earnings report
- Walmart reports better-than-expected Q4 earnings.
- A deal to buy Vizio will bolster Walmart's advertising footprint.
- The stock price is possibly overbought after today’s rise.
Walmart Inc. (WMT) rose more than 4% on Tuesday, Feb. 20, after the retail giant reported better-than-expected fourth quarter fiscal earnings figures.
Earnings per share (EPS) came in at $1.80, which beat the $1.63 consensus figure. Revenue came in at $173.4 billion, a 5.7% year-over-year increase.
Investors also cheered e-commerce sales growth of 23% and global advertising business growth of 33%, of which 22% was from Walmart Connect in the United States. Consolidated revenue for the entire year was up 6% to $648.1 billion, while adjusted operating income grew 10.2%, which trended above sales growth, according to Walmart’s fourth quarter results press release.
Other highlights include:
- Walmart raised its annual dividend 9%, the highest in over a decade.
- The 2024 operating cash flow rose $6.9 billion.
- The 2025 fiscal outlook calls for a 3%-4% growth, beating analysts’ expectations.
Walmart to acquire Vizio for $2.3 billion in surprise move
While Walmart’s numbers for the fourth quarter were impressive enough, the retailer also surprised investors by announcing that it would acquire Vizio (VZIO), the TV maker, for $2.3 billion in a move to bolster its advertising business.
The news took investors by surprise last week after rumors of the deal surfaced.
As consumers continue to cut the cable cord and move to streaming, the advertising opportunity has increased significantly. The move by Walmart will allow it to place its ads and sell ads to be featured on Vizio TVs, mostly through home screen ad placements. That mirrors a strategy used by other streamers such as Roku.
SmartCast, Vizio’s operating system, has nearly 20 million active users, growing about 400% since 2018, according to a press release from Walmart. Vizio also already has over 500 direct advertiser relationships, which should allow Walmart a seamless transition and the opportunity to keep many of those relationships, if not all.
While regulatory approval is needed, Vizio’s board and stockholders have already approved the transaction. Vizio jumped nearly 15% on the news, although its stock will no longer trade publicly upon the close of the deal.
Trading Walmart after earnings
WMT is trading at all-time highs above the 175 level through Tuesday afternoon. Technically, the Relative Strength Index (RSI) rose to 80, indicating overbought conditions, and prices are trailing slightly lower from earlier in the day. For traders expecting some consolidation in the near term, an iron condor is still a viable strategy post earnings with an implied volatility rank (IVR) of 43.5.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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