Before the opening bell yesterday, Walmart WMT reported robust second-quarter fiscal 2024 results, wherein it surpassed both earnings and revenue estimates and raised its outlook for the full year. However, shares of WMT fell 2.2% at the close following the quarterly results.
This has put ETFs having the highest allocation to the world’s largest brick-and-mortar retailers in focus. These include VanEck Vectors Retail ETF RTH, Fidelity MSCI Consumer Staples Index ETF FSTA, Vanguard Consumer Staples ETF VDC and iShares U.S. Consumer Focused ETF IEDI.
Walmart’s Earnings in Focus
Earnings per share came in at $1.84, outpacing the Zacks Consensus Estimate of $1.69 and improving 4% from the year-ago earnings. Revenues rose 5.7% year over year to $161.6 billion and topped the consensus mark of $159.8 billion. U.S. comparable sales grew 6.4%. Robust results were driven by strong demand for its low-priced groceries, and health and wellness products. The result was in contrast to rival Target TGT, which reported a 5.4% drop in sales.
Walmart is benefiting from the resilience of its massive grocery business, which is driving sales even as U.S. shoppers think twice before buying discretionary goods. It continued to win over shoppers — both in-store and online. The mega-retailer is seeing strength across segments as shoppers continue to respond to economic pressures.
Most of the strength was fueled by seasonal events, such as the Memorial Day and Jul 4 holidays as well as the back-to-school season, indicating that the consumer is not compromising and showing a willingness to spend (read: Inflation Moderates in July: ETFs to Gain).
The mega-retailer lifted fiscal 2024 guidance. It now expects revenues to rise 4-4.5% compared with the previous projection of 3.5% and earnings per share in the range of $6.36-$6.46, up from $6.10-$6.20. For third-quarter fiscal 2024, Walmart expects sales to grow 3% and adjusted earnings per share in the range of $1.45-$1.50.
Below, we have detailed the ETFs:
VanEck Vectors Retail ETF (RTH)
VanEck Vectors Retail ETF provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. Walmart takes the third spot with an 8.3% share.
VanEck Vectors Retail ETF has amassed $156.8 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 5,000 shares a day on average. VanEck Vectors Retail ETF has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Fidelity MSCI Consumer Staples Index ETF (FSTA)
Fidelity MSCI Consumer Staples Index ETF tracks the MSCI USA IMI Consumer Staples Index, holding 108 stocks in its basket. Of these, Walmart takes the fifth spot with a 7.8% share in FSTA (see: all Consumer Staples ETFs here).
Fidelity MSCI Consumer Staples Index ETF has amassed $1.2 billion in its asset base while trading in a good volume of around 157,000 shares a day, on average. FSTA charges 8 bps in annual fees from investors and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Vanguard Consumer Staples ETF (VDC)
Vanguard Consumer Staples ETF also targets the broad consumer staples space by tracking the MSCI US Investable Market Consumer Staples 25/50 Index. It holds 105 stocks in its basket, with Walmart occupying the fifth position, having a 7.8% allocation. Vanguard Consumer Staples ETF is widely spread across soft drinks, consumer staples merchandise retail, household products, and packaged foods & meats that make up for a double-digit allocation each.
Vanguard Consumer Staples ETF manages a $7 billion asset base and charges a fee of 10 bps per year. VDC trades in a good volume of around 149,000 shares per day, on average, and has a Zacks ETF Rank #3 with a Medium risk outlook.
iShares U.S. Consumer Focused ETF (IEDI)
iShares U.S. Consumer Focused ETF is an actively managed ETF providing exposure to U.S. companies with a focus on U.S. consumer spending and consumer goods. It holds 184 stocks in its basket, with Walmart occupying the fourth position at 5.7% share. IEDI is dominated by the consumer discretionary sector with nearly half of the portfolio, while consumer staples distribution & retail, and consumer services round off the next two with double-digit exposure each (read: 5 ETFs to Ride On Solid Q2 Economic Growth).
iShares U.S. Consumer Focused ETF has accumulated $14.4 million in its asset base and charges 18 bps in fees per year. Volume is paltry for IEDI as it exchanges 2,000 shares a day, on average.
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Target Corporation (TGT) : Free Stock Analysis Report
Walmart Inc. (WMT) : Free Stock Analysis Report
VanEck Retail ETF (RTH): ETF Research Reports
Vanguard Consumer Staples ETF (VDC): ETF Research Reports
Fidelity MSCI Consumer Staples Index ETF (FSTA): ETF Research Reports
iShares U.S. Consumer Focused ETF (IEDI): ETF Research Reports
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