When Walmart (WMT) posts fourth-quarter earnings on Thursday, investors will focus on guidance, as the company tries to navigate a tough retail environment under the leadership of its new chief executive.
Wall Street expects the Arkansas-based retail giant to post EPS of $0.73, implying a rise of 10.6%, while revenue is expected to rise over 4% to $188.46 billion, during the quarter. Walmart’s earnings report is often considered a signal on the broader U.S. consumer health.
This quarter will be the first time when investors will hear from its new CEO, John Furner, who took over at the beginning of the month, replacing Doug McMillon.
As retail companies face intense pressure from increasing competition and a challenging consumer spending environment, Walmart has managed to attract wealthier consumers leaning more towards online stores and faster deliveries.
Walmart has set the bar high as it became the first retailer ever to hit $1 trillion in market valuation this month—a space mostly dominated by tech giants. The stock has risen nearly 16% so far this year, outperforming the marginal fall in the broader S&P 500 Index.
“Walmart’s revenue flywheel and the growth in areas like advertising and e-commerce are opportunities to capture additional “margin-rich” revenue, particularly in advertising,” said Seeking Alpha analyst Brian Gilmartin.
Over the last two years, Walmart has beaten EPS estimates 88% of the time and has beaten revenue estimates 100% of the time.
Wall Street analysts are bullish on the stock and rated it a Buy. In contrast, Seeking Alpha analysts rated the stock a Sell, while Seeking Alpha’s Quant ratings consider it a Hold.
With investor sentiment towards artificial intelligence surging, Seeking Alpha analyst Stuart Allsopp said optimism surrounding Walmart’s partnership with Google has seen the former’s stock price surge to new highs. However, he also flagged execution risks tied to higher costs, potential brand dilution, and pressure on retail media economics.
Over the last three months, EPS estimates have seen 12 upward revisions, compared to 13 downward revisions. Revenue estimates have been revised upwards 13 times versus three downward moves.