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Factors to Note Before Walmart's (WMT) Q1 Earnings Release

Walmart Inc. WMT is likely to register top-line and bottom-line growth when it reports first-quarter fiscal 2024 earnings on May 18. The Zacks Consensus Estimate for revenues is pegged at $148,944 million, suggesting an increase of nearly 5% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for the bottom line has risen by a penny in the past 30 days to $1.31 per share. The projection indicates growth of 0.8% from the year-ago quarter’s earnings.

Walmart has a trailing four-quarter earnings surprise of 6.5%, on average. The supermarket giant delivered an earnings surprise of 12.5% in the last reported quarter.

Walmart Inc. Price, Consensus and EPS Surprise

Walmart Inc. price-consensus-eps-surprise-chart | Walmart Inc. Quote

Factors to Consider

Walmart has been gaining from its sturdy comp sales record, which, in turn, is driven by its constant expansion efforts and splendid e-commerce performance. Walmart has been undertaking several efforts to enhance merchandise assortments. Also, the company has been focused on store remodeling in an attempt to upgrade them with advanced in-store and digital innovations.

The company’s omni-channel penetration has been increasing. Its global e-commerce sales comprised more than 13% of sales as of fiscal 2023-end. Walmart has been taking several e-commerce initiatives, including buyouts, alliances and improved delivery and payment systems. The company is innovating in the supply chain, adding capacity and building businesses, such as Walmart GoLocal, Walmart Connect, Walmart Luminate, Walmart+, Spark Delivery, Marketplace and Walmart Fulfillment Services.

Walmart has taken robust strides to strengthen its delivery arm, as evidenced by its partnership with Salesforce; the expansion of InHome delivery service; investment in DroneUp; pilot with HomeValet, the launch of Walmart+ membership program; introduction of Express Delivery; and drone delivery pilots with Flytrex and Zipline among other efforts. Furthermore, the company’s store and curbside pickup options add to customers’ convenience. As of the fourth quarter of fiscal 2023, Walmart U.S. had 4,600 pickup locations and more than 3,900 same-day delivery stores.

These upsides are likely to have aided sales in the quarter under review. For the first quarter, Walmart expects consolidated net sales growth of 4.5-5% at constant currency.

However, Walmart is encountering cost inflation and expects it to remain elevated. Walmart expects product mix-related pressure to persist in fiscal 2024.

On its fourth-quarter fiscal 2023 earnings call, management offered a cautious view for fiscal 2024 due to the persistence of increased prices and chances for further macroeconomic challenges. For the first quarter of fiscal 2024, the adjusted earnings per share (EPS)  is likely to come in the range of $1.25-$1.30, including a three-cent effect from LIFO. The adjusted EPS was $1.30 in the comparable year-ago period.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Walmart this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.

Walmart has an Earnings ESP of +1.16% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks With the Favorable Combination

Here are three other companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Target Corporation TGT currently has an Earnings ESP of +0.40% and a Zacks Rank #3. The company’s bottom line is expected to decline year over year when it reports first-quarter fiscal 2023 results. The Zacks Consensus Estimate for quarterly EPS is pegged at $1.75. You can see the complete list of today’s Zacks #1 Rank stocks here.

Target’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $25.4 billion, which suggests a rise of 0.8% from the figure reported in the prior-year quarter. TGT delivered an earnings beat of nearly 36% in the last reported quarter.

Deckers Outdoor Corporation DECK currently has an Earnings ESP of +7.36% and a Zacks Rank of 3. DECK is likely to register a top-line decline when it reports fourth-quarter fiscal 2023 results. The Zacks Consensus Estimate for revenues is pegged at $703.6 million, suggesting a dip of 4.4% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for Deckers’ quarterly earnings has increased from $2.54 per share to $2.60 in the past 30 days. The estimate indicates growth of 3.6% from the figure reported in the prior-year quarter. DECK has a trailing four-quarter earnings surprise of nearly 31%, on average.

lululemon athletica LULU currently has an Earnings ESP of +1.97% and a Zacks Rank of 3. LULU is expected to register a top-line and bottom-line improvement when it reports first-quarter fiscal 2023 numbers.

The Zacks Consensus Estimate for lululemon’s quarterly revenues is pegged at $1.9 billion, calling for growth of 19.5% from the prior-year quarter’s reported figure. The Zacks Consensus Estimate for the quarterly EPS of $1.93 suggests growth of 30.4% from the figure reported in the year-ago fiscal quarter. LULU has a trailing four-quarter earnings surprise of 6.8%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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