Shares of Walmart Inc. jumped further into record territory Tuesday amid a busy day for the discount retail giant, which reported an earnings beat, confirmed a $2.3 billion deal to buy smart-TV maker Vizio Holding Corp.
VZIO,
and raised its dividend by 9%.
Regarding the Vizio deal, Walmart’s U.S. Chief Revenue Officer Seth Dallaire said he believes Vizio “provides great viewing experiences at attractive price points,” and “enables a profitable advertising business that is rapidly scaling.”
Under the terms of the deal, Walmart
WMT,
will pay $11.50 for each Vizio share
VZIO,
outstanding, which represents a 20.7% premium above Friday’s closing price of $9.53.
Walmart expects the deal to slightly reduce earnings in the near term, given transaction-related costs, such as employee retention and technology integration.
Walmart’s stock climbed 2.2% in premarket trading, while Vizio shares shot up 15.3%. The Wall Street Journal reported last week that the companies held talks about a deal.
On the downside for Walmart, the company provided a current-quarter profit outlook below expectations.
For the quarter to Jan. 31, Walmart reported net income that fell to $5.49 billion, or $2.03 a share, from $6.28 billion, or $2.32 a share, in the same period a year ago. Excluding nonrecurring 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.
U.S. same-store sales, or stores open at least a year, rose 4.0% to beat the FactSet consensus of 3.3% growth, while Sam’s Club same-store sales rose 3.1% to top expectations of a 2.7% increase.
Looking ahead, the company expects first-quarter adjusted EPS of $1.48 to $1.56, below the FactSet consensus of $1.60, and guides for full-year adjusted EPS of $6.70 to $7.12 versus expectations of $7.06.
Walmart raised its annual dividend rate to $2.49 a share from $2.28. The company said the 9.2% increase is the largest dividend boost in over 10 years.
After the stock’s three-for-one split takes effect on Feb. 26, the annual dividend rate will be 83 cents a share and the quarterly dividend will be 20.75 cents a share. The new dividend will be paid out on April 1 to shareholders of record on March 15.
Based on Friday’s stock closing price of $170.36, the new annual dividend rate implies a dividend yield of 1.46%, which compares with the implied yield for the S&P 500 index
SPX
of 1.43%.
The stock has rallied 9.7% over the past three months through Friday, while the Dow Jones Industrial Average
DJIA,
has advanced 9.9%.
