Walmart will release its third quarter results on Tuesday (November 16) and the consensus estimate for earnings per share is $ 1.40, up 4.47% from a year ago. Net income is set at $ 3.903 billion for the quarter ending Oct. 31 and revenue is expected at $ 135.5 billion, up just 0.59% from a year ago.
Half of the 32 analysts following Walmart remain bullish on the title and the other half are neutral, according to Yahoo Finance.
The Bentonville-based retail giant profited from the pandemic when much of the non-essential retail industry was forced to close stores. This resulted in strong comparable store sales which could provide difficult comparisons to the period of the previous year. Analysts’ biggest concern with Walmart is whether it can retain the share it has won amid the pandemic and how well it will be able to dampen price hikes with consumer inflation rising. by 6% in October, the largest increase in 30 years.
The consensus is for comparable sales growth of between 6% and 7% for the quarter as economists continue to tout the strength of consumers and their ability to shop and spend.
Evercore analyst Greg Melich expects earnings to be good, but warns stocks could sell off Thursday if the fourth quarter earnings forecast falls below expectations. Deutsche Bank analysts believe Walmart is gaining momentum with its Walmart + membership program with more than 32 million subscribers. Walmart increased its membership until July as Amazon membership growth stagnated, according to a Deutsche study. Morgan Stanley analyst Simeon Gutman estimates the paid subscription service could generate more than $ 1.5 billion in annual revenue.
âMembership fees nonetheless provide Walmart with a sustainable and recurring revenue stream,â he said. âThe fees are also expected to rise more and more, as the cost of providing the Walmart + benefits falls for Walmart and our analysis suggests this is already happening. “
Walmart also stood up to Amazon in a recent Profitero report. Online marketing and research firm Profitero compared the online prices of 15,520 items in 15 categories at a dozen retailers over a 12-week period ending October 3. The categories included home appliances, fashion, food and drink, toys, vitamins and supplements. Profitero said Amazon is maintaining its price differentials against other major retailers by 13% on average, while Walmart is closing the gap. The report found that Walmart’s prices were 5% or less than Amazon in 13 categories. The report showed that Walmart reduced the price gap with Amazon in food and beverages to 1% and to less than 2% in the home appliance, beauty, home furniture, sports, and other categories. outdoor activities and personal care. Walmart executives said they will continue to cut prices across multiple categories and are also using their scale to ensure stores are fully stocked for the holidays.
UBS analysts remain bullish on Walmart and its Everyday Low Price strategy, saying it has helped attract new customers to traditional grocers who are more likely to pass inflationary prices on to consumers. UBS expects modest growth in e-commerce for the quarter given the strong comparison from a year ago. UBS has a target price of $ 180.
Analysts at Stephens Inc. are also bullish on Walmart in the long term, but the estimate of $ 1.33 per share sits at the low end of consensus for the quarter. Ben Bienvenu’s price target is $ 170 and although he said the retailer is moving in the right direction, the declining gross margin amid inflationary pressures and supply chain disruptions deserves to be seen. ‘to be monitored.
KeyBanc Capital Markets analysts recently noted that Walmart’s progress towards cloud technology and digital transformation will benefit future growth and margins. KeyBanc is bullish on Walmart with a target price of $ 180.
âWalmart must continue to migrate data to the cloud to enable advanced data analytics, which should enable more personalized consumer experiences at scale,â KeyBanc wrote. Walmart data includes both in-store and online, and an example of personalization includes the ‘predictive shopping cart,’ which can create quick add-on experiences for customers while shopping for regular items such as groceries. . “
Shares of Walmart (NYSE: WMT) closed Thursday at $ 148.50, up 6 cents. Over the past 52 weeks, the shares have traded between a low of $ 126.28 and a high of $ 153.66. Walmart share value has risen 3% year-to-date.