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Things to Note as Walmart (WMT) Lines Up for Q3 Earnings
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Walmart Inc. (WMT - Free Report) is likely to register top-line growth when it reports third-quarter fiscal 2023 earnings on Nov 15. The Zacks Consensus Estimate for quarterly revenues is pegged at $147.4 billion, suggesting a rise of 4.9% from the prior-year quarter’s reported figure.
However, the bottom line is likely to have declined year over year. The Zacks Consensus Estimate for quarterly earnings has remained unchanged in the past 30 days at $1.31 per share, indicating a 9.7% decline from the figure reported in the prior-year quarter. The supermarket giant has a trailing four-quarter earnings surprise of 1.5%, on average. WMT delivered an earnings surprise of around 10.6% in the last reported quarter.
High Costs a Woe
Walmart is grappling with volatility related to rising inflation. In this regard, food inflation and cost pressure associated with fuel prices, supply chain and excess inventory are a concern. Walmart’s consolidated gross profit margin contracted by 132 basis points (bps) in the last reported quarter, primarily due to markdowns and a sales mix in the U.S. segment and a LIFO charge at Sam’s Club related to inflation. The company’s operating income at constant currency fell 6% to $6.9 billion, thanks to increased wage investments and cost inflation. We believe that the persistence of these factors might have been a headwind to the quarter to be reported.
For the third quarter of fiscal 2023, Walmart expects a consolidated operating income decline of 8-10%. The company anticipates earnings per share (EPS) decline of 9-11% in the to-be-reported quarter.
Favorable Sales Picture
Walmart is benefiting from growing e-commerce business and omni-channel penetration. In this regard, it has been undertaking several e-commerce initiatives, including buyouts, alliances and improved delivery and payment systems. Walmart is making aggressive efforts to expand in the booming online grocery space, which has been a major contributor to e-commerce sales.
The company is innovating in the supply chain and adding capacity and building businesses such as Walmart GoLocal, Walmart Connect, Walmart Luminate, Walmart+, Spark Delivery, Marketplace and Walmart Fulfillment Services. The company’s compelling pricing strategy has been aiding growth amid a rising inflationary environment. Walmart expects consolidated net sales growth of nearly 5% for the third quarter of fiscal 2023.
The Zacks Consensus Estimate for fiscal third-quarter sales at Walmart Stores U.S. is pegged at $99.6 billion compared with the $96.6 billion reported in the year-ago quarter. The consensus mark for Walmart International and Sam’s Club currently stands at $24.5 billion and almost $21 billion, respectively, up from $23.6billion and the roughly $19 billion reported in the same quarter last year.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Walmart this time around. 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Walmart currently carries a Zacks Rank #3 and has an Earnings ESP of -0.25%.
Stocks With a Favorable Combination
Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings this season:
Dollar General (DG - Free Report) has an Earnings ESP of +2.35% and a Zacks Rank #3. DG is likely to register top-line growth from the year-earlier fiscal period’s reported number when it reports third-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly revenues is pegged at $9.43 billion, suggesting 10.7% growth from the figure reported in the prior-year fiscal quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dollar General’s earnings for the fiscal third quarter is pegged at $2.54 per share, suggesting 22.1% growth from the year-ago fiscal quarter’s tally. The consensus mark has been stable in the past 30 days. DG delivered an earnings beat of 2.2%, on average, in the trailing four quarters.
Dollar Tree (DLTR - Free Report) has an Earnings ESP of +6.57% and a Zacks Rank of 3 at present. DLTR is likely to register top-line growth from the year-ago fiscal quarter’s reported number when it reports third-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly revenues is pegged at $6.83 billion, suggesting 6.5% growth from the figure reported in the prior-year fiscal quarter.
The Zacks Consensus Estimate for Dollar Tree’s earnings for the fiscal third quarter is pegged at $1.16 per share, suggesting 20.8% growth from the year-ago fiscal quarter’s tally. The consensus mark has been stable in the past 30 days. DLTR delivered an earnings beat of 8.6%, on average, in the trailing four quarters.
The TJX Companies, Inc. (TJX - Free Report) has an Earnings ESP of +0.63% and a Zacks Rank of 3 at present. TJX is likely to register top-line growth from the year-ago fiscal quarter’s reported number when it reports second-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for quarterly revenues is pegged at $12.3 billion, suggesting a 2.1% decline from the figure reported in the prior-year fiscal quarter.
The Zacks Consensus Estimate for The TJX Companies’ earnings for the fiscal second quarter is pegged at 80 cents per share, suggesting 4.8% growth from the year-ago fiscal quarter’s tally. The consensus mark has been stable in the past 30 days. TJX delivered an earnings beat of 1.7%, on average, in the trailing four quarters.
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Things to Note as Walmart (WMT) Lines Up for Q3 Earnings
Walmart Inc. (WMT - Free Report) is likely to register top-line growth when it reports third-quarter fiscal 2023 earnings on Nov 15. The Zacks Consensus Estimate for quarterly revenues is pegged at $147.4 billion, suggesting a rise of 4.9% from the prior-year quarter’s reported figure.
However, the bottom line is likely to have declined year over year. The Zacks Consensus Estimate for quarterly earnings has remained unchanged in the past 30 days at $1.31 per share, indicating a 9.7% decline from the figure reported in the prior-year quarter. The supermarket giant has a trailing four-quarter earnings surprise of 1.5%, on average. WMT delivered an earnings surprise of around 10.6% in the last reported quarter.
High Costs a Woe
Walmart is grappling with volatility related to rising inflation. In this regard, food inflation and cost pressure associated with fuel prices, supply chain and excess inventory are a concern. Walmart’s consolidated gross profit margin contracted by 132 basis points (bps) in the last reported quarter, primarily due to markdowns and a sales mix in the U.S. segment and a LIFO charge at Sam’s Club related to inflation. The company’s operating income at constant currency fell 6% to $6.9 billion, thanks to increased wage investments and cost inflation. We believe that the persistence of these factors might have been a headwind to the quarter to be reported.
Walmart Inc. Price and EPS Surprise
Walmart Inc. price-eps-surprise | Walmart Inc. Quote
For the third quarter of fiscal 2023, Walmart expects a consolidated operating income decline of 8-10%. The company anticipates earnings per share (EPS) decline of 9-11% in the to-be-reported quarter.
Favorable Sales Picture
Walmart is benefiting from growing e-commerce business and omni-channel penetration. In this regard, it has been undertaking several e-commerce initiatives, including buyouts, alliances and improved delivery and payment systems. Walmart is making aggressive efforts to expand in the booming online grocery space, which has been a major contributor to e-commerce sales.
The company is innovating in the supply chain and adding capacity and building businesses such as Walmart GoLocal, Walmart Connect, Walmart Luminate, Walmart+, Spark Delivery, Marketplace and Walmart Fulfillment Services. The company’s compelling pricing strategy has been aiding growth amid a rising inflationary environment. Walmart expects consolidated net sales growth of nearly 5% for the third quarter of fiscal 2023.
The Zacks Consensus Estimate for fiscal third-quarter sales at Walmart Stores U.S. is pegged at $99.6 billion compared with the $96.6 billion reported in the year-ago quarter. The consensus mark for Walmart International and Sam’s Club currently stands at $24.5 billion and almost $21 billion, respectively, up from $23.6billion and the roughly $19 billion reported in the same quarter last year.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Walmart this time around. 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Walmart currently carries a Zacks Rank #3 and has an Earnings ESP of -0.25%.
Stocks With a Favorable Combination
Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings this season:
Dollar General (DG - Free Report) has an Earnings ESP of +2.35% and a Zacks Rank #3. DG is likely to register top-line growth from the year-earlier fiscal period’s reported number when it reports third-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly revenues is pegged at $9.43 billion, suggesting 10.7% growth from the figure reported in the prior-year fiscal quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dollar General’s earnings for the fiscal third quarter is pegged at $2.54 per share, suggesting 22.1% growth from the year-ago fiscal quarter’s tally. The consensus mark has been stable in the past 30 days. DG delivered an earnings beat of 2.2%, on average, in the trailing four quarters.
Dollar Tree (DLTR - Free Report) has an Earnings ESP of +6.57% and a Zacks Rank of 3 at present. DLTR is likely to register top-line growth from the year-ago fiscal quarter’s reported number when it reports third-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly revenues is pegged at $6.83 billion, suggesting 6.5% growth from the figure reported in the prior-year fiscal quarter.
The Zacks Consensus Estimate for Dollar Tree’s earnings for the fiscal third quarter is pegged at $1.16 per share, suggesting 20.8% growth from the year-ago fiscal quarter’s tally. The consensus mark has been stable in the past 30 days. DLTR delivered an earnings beat of 8.6%, on average, in the trailing four quarters.
The TJX Companies, Inc. (TJX - Free Report) has an Earnings ESP of +0.63% and a Zacks Rank of 3 at present. TJX is likely to register top-line growth from the year-ago fiscal quarter’s reported number when it reports second-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for quarterly revenues is pegged at $12.3 billion, suggesting a 2.1% decline from the figure reported in the prior-year fiscal quarter.
The Zacks Consensus Estimate for The TJX Companies’ earnings for the fiscal second quarter is pegged at 80 cents per share, suggesting 4.8% growth from the year-ago fiscal quarter’s tally. The consensus mark has been stable in the past 30 days. TJX delivered an earnings beat of 1.7%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.