Walmart, Inc. (NYSE: WMT) investors are hoping the retail giant gets back on track on Thursday morning when it reports second-quarter earnings before the market open. WMT stock has lagged the market in 2018 as heavy investments continue to eat into profits, but analysts say the costs are a necessary evil to position Walmart as a long-term winner.
Consensus analyst estimates are calling for Walmart to report second-quarter adjusted earnings per share of $1.22. Analysts are also expecting revenue of $125.97 billion, up 2.1 percent from a year ago.
In addition, analysts are anticipating U.S. same-store sales growth of 2.3 percent, up from 2.1 percent last quarter.
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Investors will also be watching e-commerce sales growth closely. WMT stock crashed 7 percent in a single day back in February after fourth-quarter online sales growth dropped to 23 percent, but that number rebounded to 33 percent in the first quarter of 2018. If Walmart wants to convince investors that it can hit its full-year online sales growth target of 40 percent, it will need to demonstrate that digital sales growth kept trending higher in the second quarter.
Bank of America analyst Robert Ohmes expects Walmart to report 40 percent online sales growth in the second quarter on the strength of a number of drivers, including expansion of online grocery pick-up and the addition of same-day delivery locations and pickup towers.
“Store traffic likely remains positive given a broadly favorable macro environment, strength in apparel (helped by four recently launched private label brands), a positive customer response to expanded price investments, and improving store-level execution,” Ohmes says.
Bank of America projects Walmart will report U.S. same-store sales growth of 2 percent and EPS of $1.19, slightly below consensus expectations.
“We expect solid top line results and potential comp upside despite higher … gas prices,” Ohmes says.
[See: 7 of the Best Stocks to Buy for 2018.]
Looking beyond Thursday’s report, Ohmes says WMT stock is a great long-term bet, even if the company doesn’t demonstrate particularly impressive earnings growth over the next several quarters due to its investments in acquisitions and online sales. He says Walmart is positioning to be a market leader in the discount store cycle that will play out over the next five to 10 years.
Bank of America has a “buy” rating and $98 price target for WMT stock.
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Walmart Inc Earnings: What to Expect from WMT Stock originally appeared on usnews.com
