U.S. retail giant Walmart (WMT) is set to release its Q2 earnings report next week. This has some investors wondering whether it’s a good idea to buy shares of WMT beforehand.
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What Wall Street Expects
Wall Street is expecting WMT to report earnings of $0.72 per share, which would represent year-over-year growth of 7.46%. Revenues for the period are expected to come in at $175.51 billion, up 3.65% from the prior-year quarter.
Will WMT be able to beat these estimates? As can be seen below, it has a very strong track record of doing just that.
Key Issues Ahead of Earnings
Walmart is a bellwether for the strength of the American consumer given that it is the largest retailer in the U.S. and sells everything from electronics to clothing, groceries and toys. As such, investors, analysts, economists and politicians will be looking at its results with eagle eyes.
One area of particular focus, according to Victoria Scholar, Head of Investment at interactive investor, will be whether President Trump’s tariffs trade policy has impacted US consumer confidence and prices. Have the import levies hit Walmart’s top and bottom lines as well as prices on the shelves?
“As a company that prides itself on rock bottom prices, Walmart has already expressed frustration about the extra costs associated with tariffs, particularly from China,” Scholar said. “Walmart delivered its first ever profitable quarter in e-commerce both domestically and globally in May, so focus next week will be on whether it can continue to grow earnings there. Investors will also be watching out for the performance of Walmart’s advertising and its membership subscription Walmart+ as well as the retailer looking to bring in a diversity of revenue streams.” See below:
Danni Hewson, head of financial analysis at AJ Bell, urged investors to also look out for comments on shipping lead times, as well as inventory on the balance sheet.
“Retailing is all about shifting the right products at the right price in the right format to the target demographic. Do that, and the amount of unsold stock will be low and the need to discount to shift it will be reduced. Too much stock can mean price cutting is required and that could show up in the gross profit and then further down the profit and loss account,” she said.
Is WMT a Good Stock to Buy Now?
On TipRanks, WMT has a Strong Buy consensus based on 27 Buy ratings. Its highest price target is $130. WMT stock’s consensus price target is $113, implying a 13.33% upside.
