With the wide-moat retailer posting a solid end to fiscal 2019, we do not plan to make a large change to our $94 fair value estimate for Walmart (WMT). Strong domestic performance drove full-year results that we believe are consistent with our view that the firm enjoys enduring competitive advantages that should allow it to deliver returns even as retail changes. We anticipate leaving our long-term forecast largely intact (low- to mid-single-digit percentage revenue growth, 4% adjusted operating margins, on average, over the next decade).
Walmart saw 3% total revenue growth, to $514 billion, consistent with our forecast, against adjusted diluted EPS of $4.91, ahead of our $4.84 mark. Management reiterated that it expects a low-single-digit percentage decline in adjusted EPS in fiscal 2020, near our 5% pre-announcement forecast dip, incorporating 2.5%-3% U.S. comparable-store sales growth (excluding fuel; we call for 3%).
Fourth-quarter results saw broad strength, with comparable-store sales growth excluding fuel of 4% and 3% for the U.S. and Sam's Club units, respectively, and each of the firm's four largest international markets posting constant-currency comparable sales growth. U.S. sales were propelled by e-commerce as Walmart continues efforts to expand its omnichannel presence that we believe are prudent. While it has taken longer than expected for Walmart to lift digital sales' profitability, which continues to be dilutive, we believe it should be able to use its store network and procurement strength to deliver omnichannel results globally as cost leverage builds and it optimizes its assortment mix. Although regulatory changes in India pose significant challenges for its Flipkart unit (the alterations keep e-commerce companies from selling products from companies they are invested in and prevent exclusive or preferential agreements with vendors), we believe Walmart can still apply the company's digital expertise globally, accelerating its omnichannel transition.
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Zain Akbari, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.