Walmart Inc. (NYSE: WMT) is looking to get back on the right track on Thursday afternoon when the company reports its first-quarter earnings after the market close. Beyond the top- and bottom-line numbers, e-commerce growth will likely be key to how the market reacts to the report.
Analysts are expecting Walmart to report earnings per share of $1.12 on revenue of $120.4 billion. That revenue number would represent 2.5 percent growth compared to a year ago.
In addition, analysts are anticipating U.S. same-store sales growth of 2.1 percent, down from 2.6 percent last quarter.
[See: 7 Retail Stocks to Bag Big Dividends.]
In February, Walmart’s stock plummeted 7 percent after the company reported its fourth-quarter earnings, and the stock has continued lower in the months since. The number that spooked the market was a sharp decline in online sales growth, which dropped from 50 percent in the third quarter to just 23 percent in the fourth quarter.
Walmart expects online sales growth will accelerate to 40 percent in 2018, and its report on Thursday could go a long way in reassuring investors that the company can hit that target. Bank of America analyst Robert Ohmes expects Walmart to report 30 percent online sales growth in the first quarter and hit the 40 percent growth rate mark by the third quarter.
“WMT’s U.S. e-commerce growth should be a key focus for investors following the largely planned F4Q e-commerce growth slowdown (to 23 percent) that in part reflected a decision to pause the roll-out of online grocery to ensure strong store-level execution in the high-volume holiday period and to focus on in-store deals that don’t work as well online,” Ohmes says.
Bank of America projects Walmart will report U.S. same-store sales growth of 1 percent and EPS of $1.08, slightly below consensus expectations.
“We expect solid results despite some likely sales headwinds from cooler weather and higher year-over-year gas prices,” Ohmes says.
He says Walmart will likely continue to benefit from a strong U.S. economy, four recently launched private label apparel brands and improving store-level execution. Bank of America has named Walmart as one of the best ways for investors to gain exposure to the “discount store decade,” a cyclical boom in discount stores over the next five to 10 years.
[See: Warren Buffett’s 8 Favorite Stocks.]
Bank of America has a “buy” rating and $98 price target for WMT stock.
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Walmart Earnings: What to Expect From WMT Stock originally appeared on usnews.com
