Note: Walmart’s WMT fiscal year 2023 ended in January 2023.
Walmart (NYSE: WMT), the world’s largest retailer (by sales), which operates discount stores, supercenters, neighborhood markets and Sam’s Club warehouses, plans to report third-quarter financial results on Thursday, November 16. is. We expect WMT stock to rise. In the third quarter results, sales and profits were slightly below consensus, so there is a high possibility that the company’s performance will be below. The company expects third-quarter sales to increase 3% year over year and adjusted EPS to be in the range of $1.45 to $1.50. Sales for the full year 2024 (year ending January 2024) are expected to increase by 4-4.5%. It should be noted that Walmart currently has debt of $50.4 billion and cash and cash equivalents of $13.9 billion. This high debt not only increases the retailer’s long-term risk, but also increases its interest costs, as financing rates are significantly higher than in previous years. Additionally, the company expects U.S. comparable sales growth to slow this year. The company’s US comp sales increased by 7.4% in the first quarter of 2024, followed by a 6.4% increase in the second quarter of 2024. It will be interesting to see if the company continues this trend in its next Q3 results.
WMT stock has risen 15% from its $145 level in early January 2021 to its current level, while the S&P 500 index has risen about 20% over the past three years. However, the increase in WMT inventories is far from consistent. The stock returned 0% in 2021, -2% in 2022, and 18% in 2023. In comparison, the S&P 500 returned 27% in 2021, -19% in 2022, and 15% in 2023.that WMT underperformed S&P In 2021. actual, Consistently outperforms the S&P 500 – Good times and bad times – The past few years have been difficult for individual stocks. Other leading players in the consumer staples sector include PG, COST, KO, and even mega-cap stars like GOOG, TSLA, and MSFT. In contrast, the Trefis high-quality portfolio, which includes a collection of 30 stocks, Outperformed the S&P 500 every year over the same period. why is that? As a group, Headquarters portfolio stocks carried less risk and delivered better returns compared to the benchmark index. It’s not been a roller coaster ride, as evidenced by the performance metrics of our corporate portfolio. Given the current uncertain macroeconomic environment of high oil prices and rising interest rates, WMT may face a similar situation to his 2021. Underperform the S&P Will we see a significant increase over the next 12 months?
Our forecast values Walmart at $153 per share, which is 8% below the current market price. Check out our interactive dashboard analysis. WMT earnings preview: What can we expect from Q3? For more information.
(1) Sales are expected to be slightly lower than consensus forecasts
Trefis estimates Walmart’s third-quarter 2024 sales at approximately $157.1 billion, slightly below consensus estimates. In the second quarter of 2024, Walmart posted revenue of $161.6 billion, an increase of 5.9% year over year, driven by a 6.4% increase in U.S. same-store sales. Volume for the quarter increased by 2.9% and average ticket count increased by 3.4%. As post-pandemic changes continue, e-commerce’s contribution to comparable sales decreased by 230 basis points year-over-year. The company’s e-commerce revenue in the United States increased by 24%. This growth was supported by in-store pickup and delivery, as well as advertising.predict walmart revenue In fiscal 2024, sales are expected to increase 4% year over year to $633.7 billion.
2) EPS is likely to be slightly below consensus estimates
WMT’s third-quarter 2024 earnings per share are expected to be $1.48, slightly below consensus estimates, according to Trefis analysis. The company’s consolidated operating profit for the second quarter of 2024 increased by 6.7%, and adjusted operating profit increased by 8.1%. All three of his business units (Walmart US, International, and Sam’s Club) increased operating income in the quarter. As a result, EPS for the second quarter of 2024 was $1.84, an increase of 4.0% year-on-year.
(3) Stock price forecast is lower than current market price
According to Walmart’s valuation, the expected 2024 EPS is approximately $6.14 and the P/E ratio is 25.0x, which translates to a price of $153, which is 8% lower than the current market price.
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