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Here's What to Expect from Walmart's (WMT) Q3 Earnings

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Walmart (WMT - Free Report) saw its stock price sink 1.37% during regular trading Wednesday in a sign that investors might be nervous about the retail behemoth’s Q3 financial results that are due out before the opening bell Thursday.

Overview

Walmart is set to roll out Black Friday deals earlier than ever in an effort to stand out against rivals Target (TGT - Free Report) and Amazon (AMZN - Free Report) . The retailer is also coming off a quarter where it posted 40% U.S. e-commerce growth. Plus, Walmart’s domestic comps jumped 4.5%, which marked the discount retail giant’s highest domestic same-store sales growth in more than 10 years.

The company has also continued to ramp up its grocery delivery business throughout the U.S. as the rest of the industry, including Kroger (KR - Free Report) and other grocery powers, do the same. It is worth remembering that Walmart in August became Indian e-commerce firm Flipkart Group's largest shareholder.

Walmart stock closed regular trading Wednesday at $101.53 per share. This represented a roughly 7.7% downturn compared to its 52-week high of $109.98.

Q3 Outlook

Moving on, Walmart’s quarterly revenues are expected to pop by 1.32% to reach $124.80 billion, based on our current Zacks Consensus Estimate. Meanwhile, Walmart’s U.S. comps are projected to climb 2.9%, based on our NFM estimates.

At the other end of the income statement, Walmart’s adjusted quarterly earnings are projected to climb just 2% to touch $1.02 per share. Yet, it might be even more important to understand if Walmart is projected to top our quarterly earnings estimate. Luckily, we can turn to our exclusive Earnings ESP figure to do so.

The Zacks Earnings ESP (Expected Surprise Prediction) compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

Walmart is currently a Zacks Rank #3 (Hold) that sports an Earnings ESP of -0.70%. Unfortunately, this means our model is inconclusive. Walmart has, however, seen more downward earnings estimate revisions over the last 30 days than positive changes.

With all that said, investors should pay close attention to Walmart’s Q3 e-commerce figures, as they might determine how WMT stock trades in the near-term.

Walmart is set to release its Q3 financial results before the opening bell on Thursday.

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