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Walmart Tops Q1 Earnings Estimates, Ups View: ETFs to Gain

Before the opening bell yesterday, Walmart WMT reported blowout second-quarter 2022 results, wherein it outpaced both earnings and revenue estimates. The mega retailer raised its full-year outlook.

Earnings per share came in at $1.78, surpassing the Zacks Consensus Estimate of $1.56 and improving 14.1% from the year-ago earnings. Revenues increased 2.4% year over year to $141 billion and topped the consensus mark of $136.6 billion. The robust performance was driven by strong grocery sales and back-to-school spending.

U.S. comparable sales jumped 5.2%. E-commerce sales growth slowed down to 6% in the quarter from 37% in the prior quarter and 69% in the year-ago quarter. Walmart’s global eCommerce sales are on track to reach $75 billion by the end of the year, further strengthening the position as a leader in omnichannel (see: all Consumer Staples ETFs here).

The world's biggest retailer now expects earnings per share in the range of $6.20-$6.35, up from the prior estimate of mid-single-digit growth. Revenues are expected to grow 6-7% to more than $30 billion for fiscal 2022 and U.S. same-store sales are likely to increase by 5% to 6%, excluding fuel, up from low single digit projected earlier. For the third quarter of the fiscal year, Walmart expects same-store sales to grow 6-7%, excluding fuel, and earnings per share in the range of $1.30-$1.40.

ETFs in Focus

ETFs having the highest allocation to the world's largest brick-and-mortar retailer could see smooth trading following the results. Below we have highlighted five of them:

Consumer Staples Select Sector SPDR Fund XLP

This is the most popular consumer staples ETF with AUM of $13.1 billion and follows the Consumer Staples Select Sector Index. The fund charges 12 bps in fees per year from investors and trades in a heavy volume of 9.4 million shares a day. In total, the fund holds about 32 securities in its basket with Walmart taking the fourth spot at 9.4%. From a sector perspective, beverages and household products take the largest share with more than 24% each while, food and staples retailing, and food products account for a double-digit allocation each. XLP has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

VanEck Vectors Retail ETF RTH

This fund provides exposure to the 26 largest retail firms by tracking the MVIS US Listed Retail 25 Index. Of these, WMT occupies the third position in the basket with 8.3% share. The product has amassed $218.7 million in its asset base and charges 35 bps in annual fees. Volume is light as it exchanges nearly 41,000 shares per day. RTH has a Zacks ETF Rank #3 with a Medium risk outlook (read: Retail ETFs in Focus Ahead of Big-Box Q2 Earnings).

Vanguard Consumer Staples ETF VDC

This fund manages a $5.8 billion asset base and has exposure to a basket of 97 consumer stocks by tracking the MSCI US Investable Market Consumer Staples 25/50 Index. It charges a fee of 10 bps per year and trades in a good volume of around 123,000 shares per day on average. Here, Walmart occupies the fourth position in the basket with 8.4% allocation. The product is widely spread across household products, soft drinks, hypermarkets & supercenters  and packaged foods & meats that make up for a double-digit allocation each. The fund has a Zacks ETF Rank #3 with a Medium risk outlook (read: Consumer Staples ETF Hits New 52-Week High).

Fidelity MSCI Consumer Staples Index ETF FSTA

This fund tracks the MSCI USA IMI Consumer Staples Index, holding 104 stocks in its basket. Out of these, Walmart takes the fourth spot with 8.3% share. The ETF is widely diversified across beverages, food and staples retailing, household products, and food products. It has amassed $838.5 million in its asset base, while trading in a moderate volume of around 80,000 shares a day, on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #3 with a Medium risk outlook.

First Trust Nasdaq Retail ETF FTXD

The fund follows the Nasdaq US Smart Retail Index and holds 50 stocks in its basket. WMT takes the third spot with 6.4% of the assets. FTXD has accumulated $19.1 million in its asset base and has an expense ratio of 0.60%. It trades in an average daily volume of 9,000 shares and has a Zacks ETF Rank #3.

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Walmart Inc. (WMT) : Free Stock Analysis Report
Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports
VanEck Vectors Retail ETF (RTH): ETF Research Reports
Vanguard Consumer Staples ETF (VDC): ETF Research Reports
Fidelity MSCI Consumer Staples Index ETF (FSTA): ETF Research Reports
First Trust NASDAQ Retail ETF (FTXD): ETF Research Reports
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