Big-box retailer Walmart (NYSE:WMT) has historically been a relatively resilient business to invest in over the years. Its stores sell many day-to-day necessities, including groceries, which help ensure customer traffic remains strong.
Last week, the company reported its fourth-quarter earnings, and revenue of $164 billion was up 7.3% from the prior-year period. Comparable sales in the U.S. were up 8.3%. In e-commerce, sales also rose by 17%.
The company's consolidated gross profit rate did see a modest decline of 83 basis points, which Walmart says was due to product mix and markdowns. But adjusted operating income of $6.4 billion was still strong and rose by 6.9% year over year.
The recent results were good but the problem is that the company is seeing a slower rate of growth ahead. For the current year, it only expects sales to increase between 2.5% and 3%, in a sign that economic conditions are weighing on consumers. Walmart CEO Doug McMillon isn't overly concerned, however, stating that "If the economy is strong, our customers have more money and that’s great. If things are tougher, they come to us for value."
But as a result of the concerning outlook, Walmart's stock slid after the earnings report and is now trading around where it was to start the year. Over the past 12 months, it has risen by around 5%.
For risk-averse investors, this can still be a good, safe buy as Walmart also pays a dividend that yields 1.6%, which is in line with the S&P 500 average. And in the past decade, its share price has doubled in value.
