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Walmart's 4th-Quarter Financials: A Preview

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- By Mayank Marwah

Walmart Inc. (WMT) is set to report its fourth-quarter financial results on Feb. 19 before market opens. One of the key things to watch out for in the earnings report is its business operations in India since it has a 77% stake in Flipkart, an Indian e-commerce player.


Analysts are projecting earnings per share of $1.33 in the fourth quarter, which is flat from the year-ago quarter owing to its investment in Flipkart. Sales forecast for the quarter is $138.7 billion, likely to be aided by robust digital sales. Comparable-store sales are expected to inch up 2.9% year-over-year.

Wal-Mart targets 40% online sales growth in Q4

Walmart has surpassed Apple (AAPL) to become the third largest internet retailer and is behind only rivals Amazon and eBay.

Last year, the retail behemoth said it was looking for 40% e-commerce sales growth. To accomplish this target, the company put money in various products on its website such as celebrity-inspired apparel and high-end camping gear. In fact, the company has also bought online brands like Art.com and Bare Necessities to step up its game in the e-commerce market.

The mammoth online growth that the company has witnessed time and again resulted from its heavy investments in the space. This has taken a toll on the company's profits and earnings in the recent quarters. As of now, analysts are keen to see if the company actually achieves the online sales target given the amount of effort it has exerted.

Wal-Mart's grocery business

The big-box retailer's grocery divison is expected to have increased when the company reports its fourth-quarter earnings Tuesday. Its grocery business generates massive revenue, but, lately, competition has intensified, with customers having more options to buy food than ever before.

The investments and collaborations that the company holds in the grocery business are projected to deliver positive results in the fourth quarter. The company is head and shoulders above its counterparts, namely Kroger (KR), Target (TGT) and Costco (COST ), in the grocery business despite stiff competition.

Last word

Walmart has had a terrific 2018 holiday season owing to a favorable macroeconomic environment and constant efforts to step up its online game. In a nutshell, the company currently looks to be in good shape ahead of its earnings report.

Disclosure: I do not hold any position in the stocks mentioned.

This article first appeared on GuruFocus.