NEW YORK (TheStreet) -- Walmart (WMT) - Get Report stock is diving by 9.01% to $60.72 in late morning trading on Wednesday, after the company released its strategic outlook and growth plans at an annual investor meeting this morning.
Walmart expects net sales growth for the current fiscal year to be relatively flat, down from the 1% to 2% projected in February, according to a statement. Net sales growth for fiscal 2016 is estimated to be around 3%.
The world's largest retailer attributed the flat sales growth to currency fluctuations and a stronger dollar, as Walmart gets roughly a third of revenue and a quarter of profit from purchases abroad, Reuters reports.
During 2017, greater investments will likely impact operating income by $1.5 billion from investments in wages and training, according to a statement. Earnings per share are expected to decline 6% to 12% in fiscal 2017, but should increase 5% to 10% in 2019 compared to the prior year.
Additionally, full-year revenue will likely decline by $15 billion, CEO Doug McMillon indicated this morning on CNBC, Reuters reports.
Separately, TheStreet Ratings team rates WAL-MART STORES INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate WAL-MART STORES INC (WMT) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- WMT's revenue growth has slightly outpaced the industry average of 3.8%. Since the same quarter one year prior, revenues slightly increased by 0.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.62, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.17 is very weak and demonstrates a lack of ability to pay short-term obligations.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, WMT has underperformed the S&P 500 Index, declining 14.52% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The change in net income from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Food & Staples Retailing industry average. The net income has decreased by 15.1% when compared to the same quarter one year ago, dropping from $4,093.00 million to $3,475.00 million.
- You can view the full analysis from the report here: WMT