Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

DividendsGrocery Wars

How Much Money did Walmart (WMT) make in 2021?

Walmart (WMT) made money in 2021. For example, Walmart reported a quarterly gross profit of $37.349 billion and a quarterly operating income of $5.887 billion on 31 January 2022.

The quarterly gross profit grew from $36.818 billion on 31 January 2021. Similarly, Walmart’s quarterly operating income grew from $5.487 billion on 31 January 2021.

Walmart reported $152.871 billion in quarterly revenues on 31 January 2022. The quarterly revenues grew from $152.079 billion on 31 January 2021. Thus, Walmart’s sales grew in 2021.

How Much Cash did Walmart (WMT) generate in 2021?

In contrast, Walmart (NYSE: WMT) finished 2021 with less cash. For example, the cash and short-term investments fell from $17.741 billion on 31 January 2021 to $14.76 billion on 31 January 2022.

Similarly, Walmart’s quarterly operating cash flow fell from $13.194 billion on 31 January 2021 to $7.89 billion on 31 January 2022. Plus, the quarterly ending cash flow fell from $3.41 billion on 31 January 2021 to -$1.332 billion on 31 January 2022.

Walmart generated less cash during the pandemic year, even as its revenues grew. My guess is that Walmart’s expenses grew in 2021 and ate the cash flow.

Walmart’s Supply Chain Problems

In particular, Walmart (WMT) had to spend more to deal with supply chain problems and labor shortages in 2021.

For example, Walmart raised wages at its Sam’s Club warehouse subsidiary from $11 an hour to $15 hour in September 2021. Additionally, Walmart raised the wages of 425,000 US employees to $13 an hour. Walmart had to raise wages because it has a harder time attracting employees in a tight labor market.

Similarly, Walmart had to restructure its’ supply chain because of pandemic disruptions to the markets. In particular, labor shortages disrupted Walmart’s supply chain division in 2020, Tim Cook admits. Cook is the senior vice president of supply chain at Walmart. In response, Walmart had to ship more merchandise with fewer employees.

What Value Does Walmart have?

Despite its problems, Walmart (NYSE: WMT) offers enormous value. For example, Walmart is America’s largest grocer with 5,342 stores.

Notably, Walmart’s grocery sales grew from $399.80 billion in 2020 to $433.9 billion in 2021, Supermarket News estimates. Supermarket News estimates Walmart’s grocery sales grew by 8.53% in 2020 to 2021.

Conversely, Walmart is America’s second largest online retailer with 6.6% of the US ecommerce market in October 2021, Statista estimates. However, the largest US online retailer Amazon (AMZN) had 41% of the market.

Thus, Walmart is still a retail juggernaut, but it is a juggernaut that generates less cash.

Walmart Loses Value

Walmart (WMT) lost value in 2021. For example, Walmart’s Total Assets shrank from $252.496 billion on 31 January 2021 to $244.86 billion on 31 January 2022.

Therefore, Walmart is losing value, but is it still a value investment? My answer is yes. I think Mr. Market reasonably priced Walmart (WMT) at $149.87 on 30 March 2022. Moreover, Walmart’s share price grew from $136.67 on 28 March 2021. Hence Walmart’s share price is rising.

Plus, Walmart pays an attractive divided. For example, Walmart will pay four 56₵ dividends over the next year. Overall, Walmart shares offered a $2.24 forward dividend and a forward dividend yield of 1.54% on 28 March 2022.

I think Walmart is a shrinking company that will keep shrinking. However, I think Walmart is a company that will make money for itself and shareholders or years to come. Thus, I consider Walmart a value investment even though it is a shrinking company.