Walmart Inc. shares jumped. to record levels on Tuesday amid a busy day for the discount retail giant, which reported an earnings beat and confirmed a $2.3 billion deal to buy smart TV maker Vizio Holding Corp.
It raised its profits by 9%.
Under the terms of the deal, Walmart WMT,
It will pay $11.50 per share of Vizio VZIO,
Outstanding, representing a 20.7% premium over Friday's closing price of $9.53.
“Today’s announcement that we have agreed to acquire Vizio gives us the opportunity to reach and serve customers in new ways, connecting more dots for those who advertise with us,” CEO Doug McMillon said on the post-earnings call. To FactSet text.
Walmart expects the deal to slightly reduce earnings in the near term, given transaction-related costs, such as employee retention and technology integration.
Walmart stock rose 4.6% in premarket trading, while Vizio shares rose 15.6%. The Wall Street Journal reported last week that the two companies were in talks about the deal.
On the downside for Walmart, the company provided a lower-than-expected current quarter earnings forecast.
For the quarter ended Jan. 31, Walmart reported net income fell to $5.49 billion, or $2.03 per share, from $6.28 billion, or $2.32 per share, in the same period last year. Excluding one-time items, adjusted earnings per share of $1.80 beat the FactSet consensus of $1.64.
Total revenue grew 5.7% to $173.39 billion, above the FactSet consensus of $170.85 billion.
Walmart's U.S. in-store sales, or stores open at least a year, rose 4.0% to beat the FactSet consensus for growth of 3.3%, as the number of transactions increased 4.3% while the average transaction value fell 0.3%.
CEO McMillon said prices for general merchandise were lower than a year ago, including clothing. Food prices were lower in places like eggs and snacks, but higher in places like asparagus and blackberries.
Meanwhile, prices for dry groceries and consumables, such as paper goods and cleaning supplies, are up in the mid-single-digit percentage range from a year ago, McMillon said.
Sam's Club same-store sales rose 3.1% to beat expectations for a 2.7% increase, as transactions rose 3.6% while the average ticket fell 0.4%.
Looking ahead, the company expects first-quarter adjusted EPS to range from $1.48 to $1.56, below the FactSet consensus of $1.60, and guidance for full-year adjusted EPS of $6.70 to $7.12 versus expectations of $7.06.
Walmart raised its annual dividend to $2.49 per share from $2.28. The company said the 9.2% increase was the largest profit increase in more than 10 years.
After the three-for-one stock split becomes effective on February 26, the annual dividend will be 83 cents per share, and the quarterly dividend will be 20.75 cents per share. The new dividend will be distributed on April 1 to shareholders of record on March 15.
Based on the stock's Friday closing price of $170.36, the new annual dividend rate implies a dividend yield of 1.46%, compared to the S&P 500 SPX's implied yield of 1.43%.
The stock has risen 9.7% over the past three months through Friday, while the Dow Jones Industrial Average (DJIA),
9.9% advance
