Walmart Earnings: What To Look For From WMT

Retail behemoth Walmart (NYSE:WMT) will be reporting earnings tomorrow before market open. Here’s what to look for.

Walmart beat analysts’ revenue expectations by 2.1% last quarter, reporting revenues of $161.5 billion, up 6% year on year. It was a very strong quarter for the company: Walmart's revenue outperformed Wall Street's estimates on slightly higher-than-expected same-store sales growth. Gross margin also came in better, leading to an EPS beat.

Is Walmart a buy or sell going into earnings? Read our full analysis here, it’s free.

This quarter, analysts are expecting Walmart’s revenue to grow 3.6% year on year to $167.4 billion, slowing from the 5.7% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.65 per share.

The majority of analysts covering the company have reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Walmart has a history of exceeding Wall Street’s expectations, beating revenue estimates every single time over the past two years by 2.5% on average.

Looking at Walmart’s peers in the non-discretionary retail segment, some have already reported their Q2 results, giving us a hint as to what we can expect. Sprouts delivered year-on-year revenue growth of 11.9%, beating analysts’ expectations by 3.2%, and Grocery Outlet reported revenues up 11.7%, topping estimates by 2.4%. Sprouts traded up 13.2% following the results while Grocery Outlet was also up 6%.

Read our full analysis of Sprouts’s results here and Grocery Outlet’s results here.

Growth stocks have seen elevated volatility as investors debate the Fed’s monetary policy, and while some of the non-discretionary retail stocks have fared somewhat better, they have not been spared, with share prices down 8% on average over the last month. Walmart is down 2.6% during the same time and is heading into earnings with an average analyst price target of $73.9 (compared to the current share price of $68.17).

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