Key insights
- Walmart's earnings release is expected to show strength due to value-seeking consumer behavior amid inflation. Options pricing suggests a potential 5% swing in the stock price. While Oppenheimer expects a solid quarter, they anticipate Walmart holding full-year forecasts steady due to elevated fuel costs. Strong results could positively influence the retail sector and broader market sentiment.
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Walmart is set to post its latest quarterly earnigns before the opening bell Thursday, with the retailer's stock seen potentially climbing to new highs in the days following the results.
Based on current options pricing, traders expect Walmart's (WMT) stock could swing up to about 5% by the end of the week. A move of that size from Monday's close could lift shares above $139, surpassing their February record. The low end of that range would pull the shares under $127, giving up some of their recent gains.
Walmart shares have added about a fifth of their value since the start of the year, as investors have continued to bet on Walmart's ability to gain market share as rising inflation strains the budgets of many American consumers. The quarter was also Walmart's first under new CEO John Furner, who took over in February, with Thursday's earnings call giving Furner an opportunity to talk investors through his vision for Walmart.
Results from Walmart and several other retailers this week could provide insights into how Americans are handling inflation and surging fuel prices as the Iran war drags on.
Oppenheimer analysts recently wrote that they expect a solid first quarter from Walmart, but see the retail giant likely holding its full-year forecasts steady as fuel costs could remain elevated for much of the year. As prices rise, Morgan Stanley analysts wrote that they see Walmart "capitalizing on value-seeking behavior and playing to its strengths in price gaps, convenience, and eCommerce leadership."
Walmart's first-quarter revenue is expected to come in at $174.94 billion, up nearly 6% year-over-year, along with adjusted earnings per share of 66 cents, up 5 cents from a year ago, according to Visible Alpha estimates. Comparable store sales are projected to have grown 3.8%, while Walmart's e-commerce sales likely climbed around 22%, as the retailer has worked to boost its online sales.
Analysts are largely bullish on Walmart's stock, with ten "buy" ratings among the 11 analysts with current ratings tracked by Visible Alpha, along with one neutral rating. Their average price target just above $140 would suggest upside of about 5% from Monday's close.
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