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Walmart (WMT) Readies for Q4 Earnings: Everything to Note
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Walmart Inc. (WMT - Free Report) is likely to register a top-line increase from the respective year-ago fiscal quarter’s reading when it reports fourth-quarter fiscal 2023 earnings on Feb 21. The Zacks Consensus Estimate for quarterly revenues is pegged at $158.9 billion, suggesting growth of about 4% from the prior-year fiscal quarter’s reported figure.
The Zacks Consensus Estimate for quarterly earnings has risen by a penny in the past 30 days to $1.51 per share. However, this indicates a drop of 1.3% from the figure reported in the prior-year fiscal quarter.
The omnichannel retailer has a trailing four-quarter earnings surprise of 3.8%, on average. WMT delivered an earnings surprise of 13.6% in the last reported quarter.
Like other industry participants, Walmart is encountering cost inflation and expects it to remain elevated. In the third quarter of fiscal 2023, Walmart’s consolidated gross profit margin contracted by 89 basis points (bps), primarily due to markdowns and a sales mix in the U.S. segment, a LIFO charge at Sam’s Club related to inflation and the timing of Flipkart’s annual event.
The gross margin at Walmart U.S. fell 77 bps due to increased general merchandise markdowns and a mix shift toward grocery, somewhat offset by pricing. The persistence of any of these factors remains a concern.
For the fourth quarter, consolidated operating income growth is expected between a decline of 1% and an increase of 1%. Adjusted earnings per share (EPS) are likely to have declined 3-5% in the fourth quarter.
Management’s fiscal 2023 guidance for consolidated operating income and EPS views suggest a decline from the year-ago period’s reported figures. Management expects the consolidated adjusted operating income to have declined 6.5-7.5%. Excluding divestitures, management expects a consolidated adjusted operating income decline of 5.5-6.5%. Fiscal 2023 EPS is expected to have decreased 6-7%, and 5-6% excluding divestitures.
Favorable Trends
WMT has been gaining from its sturdy comp sales record, which is driven by its constant store expansion efforts and splendid e-commerce initiatives. Walmart has been benefiting from the growing e-commerce business and omnichannel penetration.
The company 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, adding capacity and building businesses, such as Walmart GoLocal, Walmart Connect, Walmart Luminate, Walmart+, Spark Delivery, Marketplace and Walmart Fulfillment Services. WMT has been strengthening its delivery arm, as evident from its expansion of the InHome delivery service, investments in DroneUp, a pilot with HomeValet, the introduction of Carrier Pickup by FedEx, the launch of the Walmart+ membership program and the introduction of Express Delivery, among others.
As of the third quarter, Walmart U.S. had 4,600 pickup locations and more than 3,900 same-day delivery stores. The company’s compelling pricing strategy has also been aiding amid a rising inflationary environment. Walmart expects consolidated net sales growth of nearly 5.5% for fiscal 2023. These factors bode well for the fourth quarter.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Walmart this time. 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, which is not the case here.
Walmart has a Zacks Rank #4 (Sell) and an Earnings ESP of -0.47%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Here are some companies worth considering as our model shows that these have the right combination of elements to beat earnings this season.
Burlington Stores (BURL - Free Report) has an Earnings ESP of +1.37% and a Zacks Rank #2. The Zacks Consensus Estimate for its fourth-quarter fiscal 2022 earnings is pegged at $2.71, calling for a 7.1% rise from the year-ago period figure. BURL has a trailing four-quarter negative earnings surprise of 0.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus mark for Burlington’s top line is pegged at $2.6 billion, suggesting a dip of 0.4% from the prior-year quarter’s reported figure.
Casey's General Stores (CASY - Free Report) is likely to register top-line growth when it reports third-quarter fiscal 2023 results. CASY has an Earnings ESP of +14.04% and a Zacks Rank #3. The consensus mark for Casey's top line is pegged at $3.5 billion, calling for growth of 15.5% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for Casey's bottom line has increased from $1.45 to $1.67 in the past 30 days, indicating a decline of 2.3% from the year-ago period figure. CASY has a trailing four-quarter earnings surprise of 7.2%, on average.
Dollar General (DG - Free Report) has an Earnings ESP of +0.93% and a Zacks Rank of 3 at present. DG is likely to register top-and-bottom-line growth when it reports fourth-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for Dollar General’s quarterly revenues is pegged at $10.3 billion, which suggests growth of 19.3% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for the quarterly EPS of $3.24 suggests a roughly 26% increase from the figure reported in the year-ago quarter. DG delivered a negative earnings surprise of 0.7%, on average, in the trailing four quarters.
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Walmart (WMT) Readies for Q4 Earnings: Everything to Note
Walmart Inc. (WMT - Free Report) is likely to register a top-line increase from the respective year-ago fiscal quarter’s reading when it reports fourth-quarter fiscal 2023 earnings on Feb 21. The Zacks Consensus Estimate for quarterly revenues is pegged at $158.9 billion, suggesting growth of about 4% from the prior-year fiscal quarter’s reported figure.
The Zacks Consensus Estimate for quarterly earnings has risen by a penny in the past 30 days to $1.51 per share. However, this indicates a drop of 1.3% from the figure reported in the prior-year fiscal quarter.
The omnichannel retailer has a trailing four-quarter earnings surprise of 3.8%, on average. WMT delivered an earnings surprise of 13.6% in the last reported quarter.
Walmart Inc. Price, Consensus and EPS Surprise
Walmart Inc. price-consensus-eps-surprise-chart | Walmart Inc. Quote
Cost and Profit Picture
Like other industry participants, Walmart is encountering cost inflation and expects it to remain elevated. In the third quarter of fiscal 2023, Walmart’s consolidated gross profit margin contracted by 89 basis points (bps), primarily due to markdowns and a sales mix in the U.S. segment, a LIFO charge at Sam’s Club related to inflation and the timing of Flipkart’s annual event.
The gross margin at Walmart U.S. fell 77 bps due to increased general merchandise markdowns and a mix shift toward grocery, somewhat offset by pricing. The persistence of any of these factors remains a concern.
For the fourth quarter, consolidated operating income growth is expected between a decline of 1% and an increase of 1%. Adjusted earnings per share (EPS) are likely to have declined 3-5% in the fourth quarter.
Management’s fiscal 2023 guidance for consolidated operating income and EPS views suggest a decline from the year-ago period’s reported figures. Management expects the consolidated adjusted operating income to have declined 6.5-7.5%. Excluding divestitures, management expects a consolidated adjusted operating income decline of 5.5-6.5%. Fiscal 2023 EPS is expected to have decreased 6-7%, and 5-6% excluding divestitures.
Favorable Trends
WMT has been gaining from its sturdy comp sales record, which is driven by its constant store expansion efforts and splendid e-commerce initiatives. Walmart has been benefiting from the growing e-commerce business and omnichannel penetration.
The company 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, adding capacity and building businesses, such as Walmart GoLocal, Walmart Connect, Walmart Luminate, Walmart+, Spark Delivery, Marketplace and Walmart Fulfillment Services. WMT has been strengthening its delivery arm, as evident from its expansion of the InHome delivery service, investments in DroneUp, a pilot with HomeValet, the introduction of Carrier Pickup by FedEx, the launch of the Walmart+ membership program and the introduction of Express Delivery, among others.
As of the third quarter, Walmart U.S. had 4,600 pickup locations and more than 3,900 same-day delivery stores. The company’s compelling pricing strategy has also been aiding amid a rising inflationary environment. Walmart expects consolidated net sales growth of nearly 5.5% for fiscal 2023. These factors bode well for the fourth quarter.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Walmart this time. 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, which is not the case here.
Walmart has a Zacks Rank #4 (Sell) and an Earnings ESP of -0.47%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Here are some companies worth considering as our model shows that these have the right combination of elements to beat earnings this season.
Burlington Stores (BURL - Free Report) has an Earnings ESP of +1.37% and a Zacks Rank #2. The Zacks Consensus Estimate for its fourth-quarter fiscal 2022 earnings is pegged at $2.71, calling for a 7.1% rise from the year-ago period figure. BURL has a trailing four-quarter negative earnings surprise of 0.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus mark for Burlington’s top line is pegged at $2.6 billion, suggesting a dip of 0.4% from the prior-year quarter’s reported figure.
Casey's General Stores (CASY - Free Report) is likely to register top-line growth when it reports third-quarter fiscal 2023 results. CASY has an Earnings ESP of +14.04% and a Zacks Rank #3. The consensus mark for Casey's top line is pegged at $3.5 billion, calling for growth of 15.5% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for Casey's bottom line has increased from $1.45 to $1.67 in the past 30 days, indicating a decline of 2.3% from the year-ago period figure. CASY has a trailing four-quarter earnings surprise of 7.2%, on average.
Dollar General (DG - Free Report) has an Earnings ESP of +0.93% and a Zacks Rank of 3 at present. DG is likely to register top-and-bottom-line growth when it reports fourth-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for Dollar General’s quarterly revenues is pegged at $10.3 billion, which suggests growth of 19.3% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for the quarterly EPS of $3.24 suggests a roughly 26% increase from the figure reported in the year-ago quarter. DG delivered a negative earnings surprise of 0.7%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.