Walmart’s Q3 Earnings Report: A Glimpse Into Consumer Trends

Walmart Stock

On November 16, all eyes will turn to Walmart (NYSE:WMT) as the retail giant unveils its third-quarter earnings and provides commentary offering valuable insights into national consumer behavior and spending patterns, particularly as the holiday season approaches.

Analysts predict earnings per share of $1.51, equivalent to a net income of $4.064 billion for the third quarter ending October 31, with a 0.7% increase in net earnings compared to the previous year. Revenue is expected to reach $159.18 billion, reflecting a year-over-year growth of 4.2%, according to consensus estimates.

Market observers express confidence in Walmart’s potential to exceed expectations, given its track record of surpassing estimates for the past five consecutive quarters. In the previous quarter, the company provided guidance of earnings between $1.45 to $1.50 per share on an adjusted basis, with revenue growth ranging from 4% to 4.5%.

Analysts anticipate U.S. sales revenue to be $107.981 billion, a 3.1% increase from the previous year. International sales are expected to reach $27.839 billion, marking a 10% year-over-year growth, while Sam’s Club sales (excluding membership revenue) are forecasted at $22.144 billion, up 3.5%. Membership revenue is projected to grow by 2% compared to the previous year.

Equity analysts will closely monitor operating margins, expecting a slight increase from the previous year. Projections indicate a U.S. margin of 4.9%, an international margin of 3.47%, and a Sam’s Club margin of 2.67%.

Economists from Wells Fargo Securities highlight the resilience of the consumer this year, with retail sales exceeding expectations for the past three months. Analysts expect a 0.2% decline in retail sales for October, attributing it to increased spending during the summer months. However, the upside risk lies in consumers who may have shifted holiday spending forward to capitalize on October sales from major retailers.

Bank of America analysts emphasize consumers seeking value, and retailers catering to this trend, including Walmart, which recently lowered prices on Thanksgiving groceries to pre-pandemic levels. Aldi has also announced significant price reductions on 70 seasonal food items.

Analysts will be keen on Walmart’s update regarding early holiday spending patterns and inventory levels, which have seen an uptick in seasonal items. U.S. comp sales are projected to grow between 3% to 4%, with a 14.7% increase in e-commerce growth driven by Walmart’s expanding marketplace and online grocery business.

Despite Walmart’s stock reaching a 52-week high, analysts from Stephens Inc. and Raymond James & Associates maintain a “buy” rating, citing the company’s ability to diversify revenue streams and generate cash through ancillary business units.

Zacks analysts also endorse Walmart shares for long-term investment, commending the company’s transition into an omnichannel player with diversified revenue streams. Since joining the Zacks Focus List in May 2017 at $78.13 per share, Walmart’s stock has surged over 270% as of November 9.

Walmart shares closed at $166.19 on Friday, a $2.27 increase. The stock has traded between $136.09 and $166.61 in the past 52 weeks.

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About the author: Stephanie Bedard-Chateauneuf has over six years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, health stocks, and personal finance. This stock lover likes to invest for the long-term. Stephanie has an MBA in finance.