Walmart Inc (WMT) Raises Guidance Ahead of Holiday Season

Walmart Inc (NYSE: WMT) reported a mixed third quarter on Thursday, but guided for a big holiday sales season. Walmart has impressed Wall Street for three consecutive quarters, and analysts say the retail giant’s momentum should continue for the next several years.

Walmart reported third-quarter adjusted EPS of $1.08, beating consensus analyst estimates of $1.01. Third-quarter revenue was $124.9 billion, missing analyst expectations of $125.5 billion. Revenue was up 1.4 percent from a year ago.

U.S. same-store sales grew 3.4 percent, ahead of the 3.1 percent Wall Street expected.

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After dropping to 23 percent in the fourth quarter of 2017, online sales growth continued trending in a positive direction for the third straight quarter. Walmart reported 43 percent e-commerce sales growth in the third quarter, up from 40 percent in the second quarter.

Walmart reported Sam’s Club same-store sales growth of 3.2 percent, down from a five-year high of 5 percent in the second quarter. Sam’s Club online sales were up 32 percent.

Walmart reported international sales of $29.5 billion, up 1.6 percent on a constant-currency basis. Walmart has been targeting high-growth international markets via partnerships and investments in companies like India’s Flipkart and China’s Dada-JD Daojia.

“We have momentum in the business as we execute our plan and benefit from a favorable economic environment in the U.S.,” CEO Doug McMillon says in a statement. “We’re accelerating innovation and utilizing technology to shape the future of retail.”

Looking ahead, Walmart once again raised its full-year adjusted EPS guidance from a previous range of between $4.65 and $4.80 to a new range of between $4.75 and $4.85. Walmart also adjusted its full-year same-store sales growth guidance from “about 3 percent” to “at least 3 percent.” Walmart previously said it expects full-year online sales growth of 40 percent.

Bank of America analyst Robert Ohmes says apparel, toys and grocery sales were all impressive.

[See: 8 of the Best U.S. Online Retail Stocks.]

“Walmart’s U.S. stores continue to perform well. (Low single-digit) grocery comps were negatively impacted by tough comparisons from last year’s hurricanes, but the two-year grocery comp stack was the strongest in nine years,” Ohmes says.

Bank of America has a “buy” rating and $115 price target for WMT stock.

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