Analysts expect a 2.1% net income gain for Walmart’s fourth-quarter 

This world’s largest retailer is expected to post a fourth-quarter net income of $1.44 per share in its Feb. 18 report, which represents a year-over-year increase of 2.1%. Net income is expected to total $4.158 billion and revenues are forecast at $142.57 billion, up 2.7% from the year-ago quarter ending Jan. 31.

For the full year, Walmart is expected to report total revenue of $525.015 billion, up 2.3% from the prior year. GAAP net income for the fiscal year ending Jan. 31 is expected to total $15 billion with an earnings per share consensus of $4.98.

Stephens Inc. analyst Ben Bienvenu is a bit more bullish on Walmart shares, with an overweight rating and fourth-quarter earnings estimate of $1.45 per share with full-year net income of $5.03 – an annual gain of 2.23%. Bienvenu recently raised his fiscal 2020 earnings estimates from $4.94 a share to $5.03, then growing to $5.29 by the end of fiscal 2021, representing a 5% annual growth rate. (Stephens Inc. conducts investment banking services with Walmart and is compensated accordingly.)

Walmart is expected to have benefited from a robust overall holiday sales in 2019. The National Retail Federation said consumers spend a combined $730.2 billion, up 4.1% from the prior year. Online sales rose 14.6%, beating estimates between 11-14%. Analysts also expect Walmart to be a winner this holiday season, along with Target and Amazon. But that changed when Target reported lackluster holiday sales growing just 1.4% in November and December, well below Target’s guidance and the prior year’s 5.7% growth.

Target cited weakness in toys, electronics and home goods, despite a 19% bump in online sales. Analysts said Target’s holiday weakness did not necessarily signal a systemic problem at the retailer or across the industry. But, then Macy’s, J.C. Penney, Kohl.s and Bed Bath & Beyond also each reported weak holiday sales. While analysts expect Walmart to buck that trend, Charles Grom of Gordon Haket Research lowered his U.S. comp for Walmart to 2% from the 2.8% previously forecast. He said the shorter holiday season and weakness in general merchandise sales are main reasons for the reduction.

“We don’t think our adjustment is new news and would allow Walmart to still hit the high-end of its 2.5%-3.0% comp band,” Grom said.

Grom and Bienvenu expect the holiday was “ok” at Walmart thanks in part to the retailer’s food sales, which have helped catapult the company’s online sales in recent quarters. Walmart said it bought deep in toys and analysts will be eager to see if that gamble paid off given the weakness reported by Target. Grom rates Walmart shares a “Buy” with a target price of $130.

For the quarter, analysts expect Walmart U.S. to have revenue of $93.142 billion, up 2.9% from the prior-year period. Comp sales are forecast at 3% for the quarter. This would mean comp sales for the full-year rose 3.1% which is in line with the retailer’s guidance. Sam’s Club is expected to report revenue of $15 billion for the quarter, up 0.8% year over year. Membership income is expected to have grown by 4% in the quarter. Comp sales are expected to be up 0.5% for the quarter at Sam’s Club, impacted negatively from the discontinuation of tobacco sales in various clubs. Sam’s Club is expected to have robust e-commerce sales growth in the quarter following the 32% increase reported in the third quarter.

Walmart’s international division is expected to report revenue of $34.5 billion for the quarter, a possible increase of 6.7% from the prior-year period. Walmart’s business in Mexico reported a 4.2% increase in January sales with same-store sales up 2.7%. Analysts expect sales could be challenged in China given the coronavirus outbreak that wreaked havoc on Lunar New Year celebrations across mainland China.

Analysts expect Walmart international to be a mixed bag for the quarter with Mexico and Canada reporting positive results and some weaknesses from China and the United Kingdom. Analysts will be eager to get an update of Flipkart, the Indian acquisition that has lapped a full year of ownership. Flipkart’s results will be included in Walmart’s international data. Walmart has guided higher with earnings per share rising high-single-digits for the full year, excluding the Flipkart results.

Shares of Walmart  (NYSE: WMT) closed Thursday (Feb. 13) at $117.44, up $1.59. For the past 52 weeks, the shares have traded between $95 and $125.38.