Walmart Inc. (WMT Quick QuoteWMT – Free Report) is likely to register top-and-bottom-line growth when it reports third-quarter fiscal 2024 earnings on Nov 16. The Zacks Consensus Estimate for revenues is pegged at $159.2 million, suggesting an increase of 4.2% from the prior-year quarter’s reported figure.
The consensus mark for quarterly earnings has risen by a penny in the past seven days to $1.51 per share. This indicates growth of 0.7% from the year-ago quarter’s reported figure. WMT has a trailing four-quarter earnings surprise of 11.6%, on average.
Factors to Note
Walmart’s robust comparable sales story has been a driver. This has been propelled by consistent expansion initiatives and impressive e-commerce results. Walmart has actively pursued various measures to improve its product offerings.
Walmart Inc. Price, Consensus and EPS Surprise
Furthermore, the company has prioritized the renovation of its stores, aiming to enhance them with radical in-store and digital advancements. In the second quarter alone, 165 U.S. stores underwent remodeling. Additionally, Walmart is capitalizing on its effective pricing strategy, attracting customers with competitive pricing.
In the second quarter of fiscal 2024, U.S. Comp sales saw strength across most categories, mainly led by food and consumables and healthcare. The continuation of these trends bodes well.
Walmart has been gaining from its e-commerce operations and strong omnichannel presence. The company has implemented various digital initiatives, including acquisitions, partnerships and enhancements to its delivery and payment systems. Additionally, WMT has made aggressive efforts to expand in the booming online grocery space, which has long been a contributor to e-commerce sales. In this regard, Walmart has significantly bolstered its delivery capabilities, as exemplified by its partnership with Salesforce, the expansion of the InHome delivery service, investments in DroneUp and the launch of the Walmart+ membership program, among others.
These positive developments are likely to have positively impacted the company’s sales in the quarter to be reported. For fiscal 2024, Walmart expects consolidated net sales growth of 4-4.5% at constant currency or cc. This also bodes well for the third quarter. The consensus mark for third-quarter sales at Walmart U.S., Walmart International and Sam’s Club segments suggests year-over-year growth of 3%, 10.7% and 1.3%, respectively.
However, high SG&A expenses have been a concern. Walmart’s SG&A expenses increased year over year and also deleveraged 33 bps as a percentage of sales in the second quarter. This was accountable to increased variable pay expenses, costs related to tech investments and elevated store remodel costs in the United States. Walmart expects variable pay expenses to have increased year over year in the third quarter as well. For the third quarter, management expects adjusted EPS in the range of $1.45-$1.50.
What the Zacks Model Unveils
Our proven model predicts 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 the case here.
Walmart carries a Zacks Rank #2 and has an Earnings ESP of +0.63%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks With the Favorable Combination
Here are three other companies worth considering as our model shows that these also have the correct combination to beat on earnings this time:
Costco Wholesale (COST Quick QuoteCOST – Free Report) currently has an Earnings ESP of +4.26% and a Zacks Rank #2. The company is likely to register top-and-bottom-line growth when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for Costco’s quarterly revenues is pegged at $57.7 billion, indicating a rise of nearly 6% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Costco’s quarterly EPS of $3.43 suggests an increase of 10.7% from the year-ago quarter’s levels. COST has a trailing four-quarter earnings surprise of 2.1%, on average.
Ross Stores (ROST Quick QuoteROST – Free Report) has an Earnings ESP of +2.08% and a Zacks Rank #2. The company is slated to witness top-and-bottom-line growth when it reports third-quarter fiscal 2023 results. The Zacks Consensus Estimate for ROST’s quarterly revenues is pegged at $4.8 billion, which suggests growth of 5.8% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Ross Stores’ quarterly EPS has remained unchanged in the past 30 days at $1.21, which suggests an increase of 21% from the year-ago quarter’s level. ROST has a trailing four-quarter earnings surprise of 11.4%, on average.
Kohl’s Corporation (KSS Quick QuoteKSS – Free Report) currently has an Earnings ESP of +3.46% and a Zacks Rank of 3. The company is likely to register decreases in the top and bottom lines when it reports third-quarter fiscal 2023 results. The Zacks Consensus Estimate for Kohl’s quarterly revenues is pegged at $4.1 billion, suggesting a decline of roughly 4% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Kohl’s quarterly earnings has increased by 2 cents in the past seven days to 35 cents per share, which indicates a 57.3% decline from the year-ago quarter’s reported number. KSS delivered a negative earnings surprise of 23.6%, on average, in the trailing four quarters.