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Walmart’s Stock Price Rose 9.6% after Its Fiscal 1Q17 Results

Phalguni Soni

Walmart's Fiscal 1Q17: Did Earnings Surpass Expectations?

(Continued from Prior Part)

Walmart’s plans for utilizing surplus cash flow

Walmart (WMT) paid out $4.3 billion in fiscal 1Q17 by way of dividends and share buybacks (PKW), including the repurchase of almost 41 million shares for $2.7 billion. The company plans on using surplus cash flow in the future to repurchase its own shares.

Earlier this year, Walmart’s board approved of a new $20 billion share buyback plan. Share buybacks would see the company’s share count fall and would provide upside to its earnings per share (or EPS). However, Walmart’s EPS projections appear to have factored in the impact of future share repurchases.

Dividend trends for Walmart and its rivals

Walmart is a dividend aristocrat (SDY), one of a select group of S&P 500 Index companies that have raised their dividends for at least 25 straight years, recessions notwithstanding. The company has raised its dividend consistently since 1974.

For fiscal 2017, Walmart has announced a dividend rise to $2 per share, up 2% from $1.96 in fiscal 2016. This is the 43rd straight year of dividend increases by the retailer.

Walmart’s stock was trading at a forward dividend yield of 3.1% on May 19, 2016. Target (TGT), which is also a dividend aristocrat (NOBL), was trading at a slightly lower dividend yield of 3%. Costco (COST) and Dollar General (DG) were trading at yields of 1.3% and 1.2%, respectively.

Walmart’s stock price reaction to its first-quarter earnings

Walmart’s stock jumped 9.6% to $69.20 following the company’s better-than-expected results in fiscal 1Q17. Costco, Dollar General, and Dollar Tree (DLTR), which will declare their respective earnings next week, also rose by 1%, 2.9%, and 2.1%, respectively. Walmart’s stock price has risen by 14.6% year-to-date.

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