Walmart Q3 earnings on deck: What to expect

Walmart (NYSE:WMT) is set to post third quarter results on Tuesday, with investors expecting to get a glimpse into consumer spending trends during the holidays.

Wall Street expects the Arkansas-based retail behemoth to report EPS of $0.53, while revenue is expected to rise nearly 4% to $166.75 billion.

Walmart’s lower pricing for its everyday essentials, along with services including in-store pickup and same-day delivery, has helped the company to maintain its dominance in the retail space and become a favorite among price-conscious shoppers.

Earlier in August, Walmart lifted its annual outlook and said all parts of the business, including newer ventures like marketplace, advertising, and membership, were clicking.

The company’s stock gained nearly 15% since its second quarter results. Overall, it grew over 60%, outperforming the 23% gain in the broader S&P500 Index.

Turning to the third quarter, RBC and Jefferies expect Walmart to deliver on a high-bar and raise guidance.

“Traffic data continues to trend positively, and we believe the co is well-positioned to continue to gain share into the holidays,” said Jefferies analyst Corey Tarlowe.

Gearing up for the holidays, Walmart said it is stepping up its delivery service with new incentives for delivery drivers and discounted memberships offering free shipping.

Investors will also keep an eye on operating margin, given the company’s investments in supply chain, ecommerce and advertising.

“While the stock needs a 10-15% pullback given its overbought status, the continued improvement in the operating margin at Walmart US will be a significant plus for shareholders,” noted Seeking Alpha analyst Brian Gilmartin.

Over the last two years, WMT has beaten both EPS and revenue estimates 100% of the time.

Seeking Alpha and Seeking Alpha’s Quant Ratings consider the stock a Hold, while Wall Street analysts rated the stock a Buy.

Over the last three months, EPS estimates have seen seven upward revisions, compared to 11 downward revisions. Revenue estimates have been revised upwards 10 times, versus three downward moves.

Following Walmart’s earnings report, retail giant Target (TGT) is also set to announce its quarterly results before the opening bell on Wednesday.