Walmart is expected on Nov. 19 to report modest earnings growth in its third-quarter ended Oct. 1. The Bentonville-based retailer is expected to post earnings per share of 53 cents, up 3.92% from a year ago with revenue of $167.5 billion, up 4.2% year over year.
A growing number of analysts expect Walmart will exceed that consensus behind stronger results across all of it operating segments.
Walmart is expected to see 3.5% sales comps in the quarter in its U.S. operating division, led by higher market share with higher-income households. Comp sales growth are expected to be led by grocery and health and wellness with a positive transaction uptick even amid falling prices. U.S. comp sales rose 4.9% a year ago. Global online sales are expected to grow 20% in the quarter over a year ago, led by grocery and marketplace.
U.S. store sales are expected to be $113.35 billion, up 3.5%, excluding fuel. International sales are estimated to reach $29.85 billion, up 6.5%, and Sam's Club revenue is expected to be $22.71 billion, up 4.1%, excluding fuel.
Robbie Ohmes, analyst with Bank of America, notes that store remodels, expanded online inventory though marketplace sellers and convenience plays like free pickup or delivery and growth in the Walmart+ membership should benefit the sales and overall profitability that flows to net income. He said Walmart is well-positioned to grow share with consumers in all income brackets because of its value play amid more price-conscious shoppers.
Simeon Gutman, an analyst with Morgan Stanley, is bullish on Walmart beating estimates. He recently raised his price target to $89 from $82 and maintained his "buy" rating on the stock. He said the retailer should report modest gains on higher operating leverage created from the strong online sales and value-conscious shoppers. He said food is a big reason why Walmart continues to be a retail winner.
Analysts at Telsey Advisory Group (TAG) have Walmart as their top stock pick for the upcoming holiday season behind a solid quarterly performance thanks to increased market share in grocery and benefits from store remodels and digital expansion.
"We also expect a continued solid contribution from the company's higher engagement with upper-income households," TAG analysts, led by Joseph Feldman, said in a note. "This should be partly offset by disinflation/deflation in select categories and ongoing pressure from the challenging consumer spending environment."
Noah Rohr, analyst with Morningstar, is not as bullish. He said Walmart's third-party fulfillment capacity pales relative to Amazon's scale. He said Amazon can underprice Walmart on commissions, listing fees and fulfillment services related to its marketplace. He also said Sam's Club is likely to underperform Costco given its smaller scale. He also expects Walmart's sales of higher-margin general merchandise to decline due to more competition from deep discounters and online competitors like Shein and Temu.
Shares of Walmart (NYSE: WMT) closed Thursday at $84.47, down $1.03. For the past 52 weeks the share price has ranged from $49.85 and $85.79. Walmart shares have risen more than 60% in the calendar year, which has some market watchers more cautious about a rally occurring after a projected earnings beat, saying the shares are already expensive relative to earnings potential.