On Tuesday, JPMorgan has maintained its Overweight rating and $97.00 stock price target for Walmart Inc. (NYSE: NYSE:WMT), following the retailer's latest earnings report. Walmart's financial results surpassed expectations, with earnings per share (EPS) of $0.58, around 9% higher than the anticipated $0.53 by Wall Street and above JPMorgan's own estimate of $0.55, which had been adjusted upward prior to the report.
The positive outcome was attributed to stronger-than-expected U.S. comparable sales, which increased by 5.3%, compared to JPMorgan's forecast of 4.6%. This figure also exceeded Wall Street's prediction of a 3.8% rise. The growth in U.S. comps was driven by a combination of higher transaction volume, up by 3.1%, and an increase in the average ticket excluding fuel, which climbed by 2.1%.
Walmart's gross margin in the U.S. improved by 40 basis points (bps), and the international segment performed better than anticipated, contributing to an overall enterprise gross margin expansion of approximately 20 bps year-over-year to 24.2%.
This was in line with expectations and was helped by effective inventory management, improved e-commerce margins, and a favorable product mix. Despite a shift due to the Big Billion Days, the operating margin also showed a modest year-over-year increase of about 10 bps to 4.0%.
Inflation in the grocery sector was notably higher, with a 100 bps increase compared to the previous quarter's 60 bps and the first quarter's 80 bps rise. This was primarily due to the cost of eggs. Additionally, general merchandise in the U.S. saw a low single-digit percentage increase after remaining flat in the last quarter.
In other recent news, Walmart has been the focus of various analyst reports following its strong third-quarter performance. The company reported a significant 5.3% increase in U.S. comparable sales, and a 9.8% rise in total enterprise constant currency EBIT dollars.
Morgan Stanley (NYSE:MS) maintained an Overweight rating and a price target of $89.00, highlighting Walmart's faster-than-expected growth in sales, EBIT, and EPS. Walmart's diverse, high-margin revenue streams and strategic investments in advertising have contributed to its robust growth.
Citi reaffirmed its Buy rating on Walmart, noting the company's strong performance across all business segments. The firm also highlighted Walmart's improved U.S. gross margins and the upward revision of its full-year earnings guidance. Similarly, Barclays (LON:BARC) maintained its Overweight rating, emphasizing the company's significant momentum across most business lines and categories.
Goldman Sachs reiterated its positive stance on Walmart, maintaining a Buy rating and an $81.00 price target. The firm's analysis followed Walmart's financial results, which surpassed expectations with adjusted earnings per share. Stifel maintained a Hold rating on Walmart shares, noting the company's strong operating momentum, attributing it to market share gains across most of its business segments.
Finally, Piper Sandler showed a positive outlook on Walmart shares by increasing the company's price target to $93 from the previous $83 while maintaining an Overweight rating. These recent developments suggest that Walmart's financial performance and growth potential are being positively received by analysts.
InvestingPro Insights
Walmart's recent financial performance, as highlighted in JPMorgan's analysis, is further supported by real-time data from InvestingPro. The company's market capitalization stands at an impressive $675.86 billion, reflecting its dominant position in the retail sector. Walmart's revenue for the last twelve months reached $665.03 billion, with a solid revenue growth of 5.43% over the same period.
InvestingPro Tips reveal that Walmart has maintained dividend payments for 52 consecutive years, demonstrating its commitment to shareholder returns. This is particularly noteworthy given the company's strong financial performance and market position. Additionally, Walmart is trading near its 52-week high, which aligns with the positive outlook presented in the JPMorgan report.
The company's P/E ratio of 43.55 suggests that investors are willing to pay a premium for Walmart's shares, possibly due to its strong market position and consistent performance. This is further supported by another InvestingPro Tip indicating that Walmart is trading at a high earnings multiple.
For investors seeking more comprehensive insights, InvestingPro offers 16 additional tips for Walmart, providing a deeper understanding of the company's financial health and market position.
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