With Walmart’s first quarterly results post its 3-1 stock split coming up on Thursday, May 16, all eyes are on WMT as investors anticipate the outcome.
As the retail landscape evolves, Walmart’s report will provide insight into current consumer shopping trends, particularly with Target’s TCG earnings on the horizon. Let’s delve into whether now presents an opportune moment to delve into Walmart’s stock as Q1 earnings draw near.
Anticipated Q1 Performance
Estimates from Zacks project a 6% increase in Walmart’s Q1 earnings to $0.52 per share, with anticipated quarterly sales growth of 4% to $159.33 billion. Zacks ESP suggests the possibility of Walmart surpassing earnings projections, with the Most Accurate Estimate placing Q1 EPS at $0.54, 2% above the Zacks Consensus.
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In the past four quarters, Walmart has outperformed bottom-line expectations in three instances, notably exceeding Q2 EPS estimates by 9% in February, reporting earnings of $0.60 per share against the Zacks Consensus of $0.55.
Image Source: Zacks Investment Research
Growth Trajectory & Future Outlook
Predictions indicate a 6% uptick in Walmart’s annual earnings for fiscal 2025, with a further 8% increase expected in FY26, reaching $2.55 per share. Total sales are forecasted to climb 4% in FY25, with Walmart’s top line projected to expand another 4% in FY26 to $699.86 billion.
Image Source: Zacks Investment Research
Recent Performance & Valuation Analysis
Walmart’s ability to offer affordable solutions and act as a buffer against inflation has facilitated a commendable 18% climb in the past year. While this lags behind the S&P 500’s 26% rise, it surpasses Target’s 1% dip. Year-to-date, Walmart has soared 14%, outperforming both the benchmark index and Target.
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In terms of valuation, Walmart currently trades at 25.6X forward earnings, slightly above the S&P 500’s 21.9X but notably surpassing Target’s 17.1X. The forward P/S ratio for WMT stands at 0.7X, significantly below the ideal level of less than 1X and comparable to Target’s figure, while notably lower than the S&P 500’s 3.8X.
Image Source: Zacks Investment Research
Key Takeaway
As Walmart’s Q1 report looms, the stock holds a Zacks Rank #3 (Hold). Although its current valuation might suggest potential for enhanced buying opportunities ahead, long-term investors could continue to reap benefits from current levels.
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