All eyes will be on Walmart next Thursday (Aug 21) when the retailer reports second-quarter earnings in the midst of ongoing Trump tariff-related trade policy challenges and an uneasy consumer.
Analysts expect Walmart to post adjusted earnings per share between 72 cents and 73 cents, representing a 7.46% year-over-year increase.
Consolidated net income is forecast at $5.755 billion versus $4.501 billion a year ago. Revenue is projected between $174 billion and $175.6 billion, representing an increase of more than 5.6% from the same period last year.
Analysts are largely bullish on Walmart and believe the earnings will test its digital strategy amid macroeconomic challenges. Market watchers point to a profitable e-commerce business that is growing around 22% annually. They also like the retailer’s value-driven pricing strategy that is supported – if not subsidized – by growing revenue streams with Walmart Connect advertising and a growing Walmart+ membership base that is up 14.8%, according to UBS.
Bentonville-based Walmart provided quarterly guidance in May for consolidated sales to increase by roughly 4% to $167.8 billion. The retailer gave no guidance for same-store sales or operating income across its business units.
“Given the dynamic nature of the backdrop, and the range of near-term outcomes being exceedingly wide and difficult to predict, we felt it best to hold from providing a specific range of guidance for operating income growth and EPS for the second quarter,” Walmart Chief Financial Officer John David Rainey said in May.
SEGMENT FORECASTS
Walmart’s U.S. segment is expected to report sales of $118 billion, up 2.9% from the year-ago period. Operating income is pegged at $7.011 billion, with an operating margin of 5.9%, and comp sales growth of 2.9% from a year ago. U.S. ecommerce sales are expected to total more than $21 billion, up 17.9%, according to analysts with Raymond James.
Sam’s Club is expected to report sales of $23.77 billion, up 3.5% from a year ago. Operating income that included membership income is pegged at $622 million, versus $581 million a year ago. Sam’s operating margin is expected to be 2.62%, compared with 2.54% a year ago. Comp-store sales growth is projected at 3%, with e-commerce sales up 10% year over year.
International sales are expected to total $31.123 billion for the quarter, up 5.3% year over year. Analysts expect operating income of $1.463 billion, versus $1.36 billion a year ago. The operating margin is forecast at 4.7% up from 4.6% a year ago. The segment is expected to show strength in China and India, with Mexico posting sluggish growth in the past quarter.
ANALYST INPUT
D.A. Davidson maintained its “buy” on Walmart with an average target price of $108.87, noting that the retail giant has a track record of exceeding expectations in recent quarters. Also, institutional investors have been actively acquiring the stock to the tune of $42 billion over the past year.
Oppenheimer increased its target price on Walmart from $110 to $115 and gave the company an “outperform” rating in an Aug. 6 research note. Tigress Financial and Sanford Bernstein each recently reiterated their “buy” recommendations. Tigress raised its target price to $120.
Shares of Walmart (NYSE: WMT) closed Friday at $100.03, down 58 cents. Shares have increased more than 10.65% since Jan. 1. Over the past 52 weeks, the shares have traded between $72.52 and $105.30.