Why Wal-Mart (WMT) Unveils a Bullish Picture Post Q3 Earnings
It has been a week since Wal-Mart Stores Inc. WMT released its financial numbers for third-quarter fiscal 2018, and we are already seeing an increased optimism among analysts. This is quite apparent from the uptrend in the Zacks Consensus Estimate. Constructive view of analysts along with the stock’s solid run on the bourses post earnings, makes this Zacks Rank #2 (Buy) company a favorable pick for investors.
Notably, shares of this supermarket giant have jumped 7.3% since the company’s strong results and outlook. In fact, the stock has been a favorite in the investor community for quite some time now. The company’s shares have surged 42.3% so far this year, faring even better than the industry’s gain of 31.6%.
Favorable Estimate Revisions
The consensus estimates for the fourth quarter and fiscal 2018 have edged up by a notch to $1.36 and $4.42, respectively, over the past seven days. This follows Walmart’s spectacular performance in the third quarter, which also marked the company’s ninth consecutive quarter of positive earnings surprise. Moreover, the solid results prompted management to provide an upbeat outlook.
Wal-Mart Stores, Inc. Price and Consensus
Wal-Mart Stores, Inc. Price and Consensus | Wal-Mart Stores, Inc. Quote
Walmart’s quarterly adjusted earnings of $1.00 per share came ahead of the Zacks Consensus Estimate of 97 cents and grew 2% from the year-ago period. Total revenues came in at $123.2 billion (including membership and other income) that advanced 4.2% year over year and surpassed the Zacks Consensus Estimate of $121.1 billion. Additionally, Walmart recorded positive comps growth for the 13th successive time, as U.S. comps (excluding fuel) rose 2.7%, largely driven by improvement in comp traffic and strong e-commerce sales. (Read More: Walmart Stock Gains on Solid Q3 Earnings & Raised View)
Management now envisions adjusted earnings for fiscal 2018 in the range of $4.38-$4.46 per share, as compared with the prior expectation of $4.30-$4.40. For fourth-quarter fiscal 2018, Walmart expects both U.S. comps (excluding fuel) and Sam’s Club comps (excluding fuel) to increase in a range of 1.5-2.0%.
Near-Term Catalysts
While this big-box retailer has been gaining from various strategic initiatives, strength in its e-commerce business remains one of its major driving factors. We note that Walmart is trying every means to evolve with the changing consumer environment to compete with brick-and-mortar rivals and e-commerce king Amazon AMZN. In this regard, the company has been taking initiatives, including buyouts, alliances, and improved delivery and payment systems. Evidently, Walmart’s buyouts of Bonobos, ShoeBuy, Moosejaw, ModCloth and Jet.com, along with its Walmart Pay mobile payment system and Mobile Express Returns program underscore its quest to accelerate online business.
Apart from this, Walmart is undertaking aggressive initiatives to expand in the booming online grocery space, which was a major contributor to e-commerce sales in the third quarter. Walmart’s efforts to enhance delivery services also resonates well with its strategy of growing online grocery sales. Backed by all aforementioned endeavors, Walmart’s U.S. e-commerce sales soared 50%, primarily owing to Walmart.com’s performance, including significant contributions from Walmart’s online grocery service.
Given these impressive efforts, management’s impressive outlook and positive analyst sentiment, we believe that Walmart is most likely to sustain the solid momentum.
2 More Stocks That Witnessed Positive Estimate Revisions Lately
The fiscal 2017 consensus mark for Ross Stores Inc. ROST has moved up by 4 cents to $3.28 over the past seven days. This discount store retailer has a Zacks Rank #2.
Carrying the same Zacks Rank as Walmart, Dollar Tree, Inc. DLTR has seen estimates for the fourth quarter and fiscal 2017 increase from $1.80 to $1.85 and $4.66 to $4.81, respectively, over the past seven days.
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