A sharp decline in the share buyback of Wal-Mart, Why?

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Wal-Mart stores Inc. (NYSE: WMT) third quarter earning result released on Thursday. The discount store profit fell in the current quarter as the most shoppers are ready to spend on Amazon.com Inc (NASDAQ:AMZN).

The company bought back 19.6 million shares in its third quarter of fiscal year 2017 for about $1.4 billion, while the last quarter buy back was 30.3 million shares for approximately $2.1 billion. It means there is a sharp decline in the share buyback value in the current quarter.

Wal-mart is focusing on investment in order to compete Amazon. The discount store is planning to add 1,000 online grocery pick up stores by the end of next financial year.

“Our ecommerce growth accelerated, operations in the U.S. continued to strengthen and international delivered
another solid performance,” said CEO Doug McMillon in the earnings statement.

In August of this year Wal- Mart made its biggest e- commerce deal in history, agreed to buy Jet.com for $3 billion.

The company paid about $1.5 billion in dividend this quarter. However in the last quarter, company paid $1.6 billion in dividends.

Lead retail analyst at Consumer Edge Research, David Schick said that this fall in share repurchase likely showing investment by the company.

“A combination of capital investments in technology, both for e-commerce and in-store capabilities, [combined with] greater wage investments would naturally leave less cash flow available and slow the pace of share buyback[s],” Mr. Schick wrote in an email. “This confluence makes sense given Wal-Mart reinvesting in the business.”

Wal- Mart said that it will return money to shareholders through share repurchase.  “During this transformational time, a key priority remains using our financial strength to provide strong cash returns to shareholders in the form of dividends and share repurchases,” said Mr. Biggs, according to a FactSet transcript.

Wal Mart’s profit for the quarter is $3.03 billion, compared to $3.30 a year ago. Revenue rose 0.6% to $118.2 billion. However, Wall Street expected $118.29. E-commerce sales were up 21%.

Market cap. of Wal-Mart is 214.02 billion. Trailing P/E of the company is 14.90, while the 52-wek high and 52-week low is $75.19 and $58.32 respectively. Share of the company closed down 3.1% at $69.19 on Thursday.

Published on 18/11/2016  www.stockmarketdaily.co – Follow us on Twitter:@SMDailyCo and Facebook: @StockMarketDaily

Wal-Mart, Quarterly result, dividend, Buyback, Amazon, Investment, E-commerce, capital investment

NYSE:WMT, NASDAQ:AMZN