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Walmart to Report Q2 Earnings: What???s in the Cards for the Supermarket Giant?

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Walmart (WMT - Free Report) will be reporting their second quarter earnings before the opening bell on Thursday. The supermarket giant has had a solid year thus far, up 15.4% year-to-date, outpacing the broader supermarket market. Walmart has found success this year by turning their focus on expanding their e-commerce and store operations. The company’s shifted business focus supplemented Walmart’s strong first quarter results. What are estimates projecting for Walmart in their second quarter report? Let’s take a look at Walmart’s second quarter under the lens of our Zacks estimates.

Overview and Q1 Report

Walmart is based out of Bentonville, Arkansas and was founded in 1945. The company operates more than 11,600 retail units under 59 different banners in 28 countries. Walmart also has e-commerce websites in 11 countries. Walmart markets merchandise under licensed brands such as Better Homes & Gardens, Danskin Now, Farberware, General Electric and more. Walmart breaks up its operations into three main segments: Walmart U.S., Walmart International, and Sam’s Club. The company is looking to boost its international segment by shifting focus to potentially profitable countries.

In Q1 2019, Walmart reported revenue of $123.9 billion and earnings of $1.13 per share. Total revenue fell short of estimates by 1.1% and earnings beat estimates by 10.8%. Q1 2019 marked the company’s fifth straight earnings beat. The company’s Walmart stores segment generated $80.3 billion for a 3.3% jump. The Walmart International sector reeled in $28.8 billion, dropping 4.9% from Q1 2018. Sam’s Club brought in $13.8 billion, jumping 1.5% from the year ago quarter but missed our estimate by 1.08%. Wal-Mart stores added 7 stores in Q1, bringing the total to 4,763. The International Walmart segment added 13 stores in Q1 for a total of 6,006 and total number of stores under WMT increased to 11,368.

Q2 Outlook

In Q2 2019, consensus estimates are calling for the bottom line to drop 6.2% to $1.21 per share and for revenue to jump 1.92% to $130.49 billion. The Wal-Mart segment is projected to hike 2.38% to $84.8 billion. The Wal-Mart stores segment beat our estimates three out of the past four quarters. Sam’s Club revenue is expected to climb 1.28% to $14.98 billion and Walmart international revenue is forecasted to reach $29.9 billion. Sam’s Club revenue has fallen short of our estimates the past two quarters. Sam’s Club is expected to add a store next quarter and the international Walmart sector is expected to add 35 stores.

Walmart is set on evolving its business with the contemporary consumer environment by expanding its e-commerce presence. Walmart has also been gaining from its comparable store sales, which in turn is driven by its constant expansion efforts. The company has been posting positive comparable store sales in the U.S. division for 19 straight quarters. With the increase in demand for delivery, Walmart is committed to the changing consumer demand landscape by providing online ordering and in some areas, deliveries. Walmart is currently a Zacks Rank #2 (Buy) and has an average EPS surprise of 7.32% over the past four quarters.

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