Market watchers expect strong quarterly report from Walmart

Walmart is expected to outperform analysts’ expectations on the top and bottom lines when it reports fourth quarter and fiscal 2024 earnings on Tuesday (Feb. 20) ahead of the market opening.

Consensus estimates have crept up in the past few weeks to $1.66 per share for the last quarter of the year. That would equate to net income of roughly $4.482 billion for the quarter, up 3.9% from a year ago. Revenue is forecast at $168.804 billion, up 2.6% year over year.

For the full fiscal year, analysts expect net income of $17.584 billion or $6.51 per share, up 3.7% from the prior year. Revenue is forecast to have grown 5.2% to $642.988 billion for the year.

Walmart’s U.S. comp sales are expected to rise 3.5% for the year-over-year quarter. Comp sales are expected to be lower than the 8.4% the company reported a year ago. E-commerce sales are expected to have grown by 20% in the U.S. segment. E-commerce is expected to have lifted U.S. comp sales by 1.5% in the quarter. Walmart U.S. could post revenue of $116.061 billion for the quarter, up 2%. For the full year, Walmart U.S. revenue is forecast at $440.235 billion, up 4.7%.

While the top and bottom line beat are positive for Walmart, the retail giant might see margin compression in the quarter compared to a year ago. Walmart’s other revenue streams from advertising, membership, data and delivery services could brighten the overall report, according to analysts with KeyBank.

Ben Bienvenu, an analyst with Stephens Inc., said Walmart’s operating environment is seeing some moderation with inflationary pressures. He said stubbornly high packaged foods prices have forced Walmart to pressure suppliers now that input costs are coming down. He expects Walmart’s private brand to perform well in the near to long term.

Stephens has an overweight (buy) rating on Walmart shares (NYSE: WMT). Walmart shares have traded between $136.09 and $171.87 over the past 52 weeks. The stock value has increased 19% over the past year.

Walmart International is expected to have fiscal fourth-quarter revenue of $28.682 billion, up 4% from a year ago. For the fiscal year, the diverse international segment is expected to have revenue of $110.904 billion, up 9.8%. Stronger performances are expected from Mexico and China for the quarter.

Sam’s Club is expected to post fourth-quarter revenue of $22.163 billion, up 3.5% from a year ago. E-commerce is expected to lift comp sales by 1%. For the year, sales revenue is forecast at $86.490 billion, up 2.5%. Other income which includes memberships for Sam’s Club, Walmart Plus and other ancillary businesses could total $1.344 billion for the quarter, up 3%. For the year, other income is estimated to total $5.358 billion, up 0.9%.

Analysts with Barclays said Walmart’s earnings come on the heels of several strong quarters in 2023, which were boosted by bigger revenue from sales of necessities like groceries and gas. However, lower grocery prices and a softening in sales of general merchandise will likely slow Walmart’s recent gains. Bank of America Securities analysts said recent credit card usage data looked promising for the retailer and they expect earnings to outperform estimates on the top and bottom lines.