Walmart headlines what is undoubtedly a critical week for retail earnings. The largest retailer in the world based on corporate revenues, Walmart is set to report its fiscal second-quarter earnings results on Thursday before the opening bell.

Wall Street remains bullish on the company’s bottom line. Analysts are expecting Walmart to deliver quarterly earnings of 73 cents per share, marking an 8.96% jump relative to the same quarter in the prior year. Leading into the announcement, analysts’ estimates have increased 1.39% in the past 7 days.

Image Source: Zacks Investment Research

Walmart has either met or exceeded estimates in twelve consecutive quarters. The leading retailer delivered a trailing four-quarter average earnings surprise of 5.27%.

Our proprietary Zacks Earnings ESP (Expected Surprise Prediction) indicator sits at +1.26% for the upcoming announcement; this means that our proven model conclusively predicts another earnings beat for Walmart. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) increases the odds of an earnings beat. Walmart stock remains a Zacks Rank #2 (Buy) at the moment.

The Zacks Consensus Estimate for Q2 revenues is pegged at $175.51 billion, which would mark a 3.65% improvement versus the year-ago period. Walmart hasn’t missed on the top line since 2020.

Walmart shares are slightly outperforming the market this year, currently up around 13%. However, the stock has been lagging off the April lows. With Wall Street maintaining a bullish outlook, a positive earnings surprise could drive the stock higher.

Image Source: StockCharts

Walmart Set to Deliver Steady Revenue Growth in Q2

The Bentonville-based retailer is expected to show solid growth despite tariff-related headwinds. Management anticipates net sales to rise between 3.5% and 4.5%, building on momentum from its core U.S. business and expanding global operations.

In terms of same-store sales, the expectation for U.S. comps (ex-fuel) is 4.17%, which will compare to a 4.8% gain in the preceding quarter and a 4.3% gain in the year-earlier period. We expect Walmart to continue to post impressive comparable sales growth, supported by its ongoing expansion initiatives and strong e-commerce performance.

Walmart benefits from the inherent strength of its highly diversified business model. Its value pricing strategy has boosted market share in the grocery business and is likely to have resulted in higher shopping frequency and stronger unit volumes in the second quarter. Walmart’s core business is thriving in regard to grocery and essential home items, which make up roughly 60% of its sales.

Along the same lines, Walmart’s e-commerce platform – driven by store-fulfilled pickup, rapid delivery, and robust advertising growth – is likely to remain a vital driver of the company’s sales momentum. In the first quarter, Walmart’s Global e-commerce sales rose 22% as the digital mix increased across all segments, while U.S. e-commerce sales rose 21%. The retailer emphasized that its omni-channel strategy continues to gain relevance in today’s dynamic retail environment.

Membership fee income is also climbing across the company. In the first quarter, Walmart’s membership fee income rose 14.8%, driven by double-digit growth in Walmart+ subscriptions and strong renewals at Sam’s Club amid a rapid international expansion. We expect the strong membership fee growth resumed in the second quarter, boosting sales and reinforcing Walmart’s membership-driven strategy.

Tariff Woes to Remain in Focus

Despite a strong start to the year, Walmart (WMT Quick QuoteWMT - Free Report) expects potential hurdles in the coming quarters. The company withheld its fiscal second-quarter earnings outlook, citing uncertainty related to tariffs and a highly fluid economic environment. These tariff costs are expected to push prices higher in the near-term.

However, Walmart noted earlier in the year that roughly two-thirds of U.S. sales were from domestically-sourced products, which provides the company with a degree of insulation relative to competitors. We anticipate that second-quarter results likely benefited from pulled-forward demand, particularly in specific categories like electronics.

Still, Walmart faces mounting headwinds that could impact its near-term financial performance. The company acknowledged that it is not fully immune to the short-term effects of ongoing tariffs. While Walmart believes it is well-positioned to manage these challenges better than its peers, elevated tariffs remain a notable risk. Macroeconomic concerns and currency fluctuations also pose potential challenges to profitability.

Final Thoughts

Digital and brick-and-mortar operators have been converging for some time now, with Walmart a growing online vendor. The leading retailer is steadily becoming a heavy advertising player thanks to its beaming digital business.

Market participants will be looking to Walmart for clues regarding how consumers and retailers are responding to President Trump’s tariffs. After a slump in consumer spending this spring, retail sales ticked up 0.9% in June and 0.5% in July. It will be interesting to see if the stock can regain its momentum after the company delivers its quarterly results.