On Monday, Evercore ISI analysts included Walmart (NYSE:WMT) stock on their Outperform Tactical Trading list, highlighting potential upside ahead of the company's earnings report on May 16.
The firm anticipates Walmart will achieve a 3.6% comparable store sales (comp) growth and earnings per share (EPS) of $0.53 for the first quarter, which they consider attainable targets.
Evercore ISI recently updated its comp and earnings forecast for Walmart following findings from their Multichannel survey conducted last week.
The analysts note that Walmart is effectively executing its business strategy, particularly through initiatives like digital advertising, the Walmart Plus membership program, and increased automation efforts.
They suggest that even a slight improvement in digital profitability, excluding the incremental benefits from advertising and alternative profit streams, could significantly enhance the company's margins.
The analysts expect Walmart to maintain a positive dialogue regarding the steady performance of its low to middle-income consumer base, as well as gains in higher income segments.
These factors are likely to contribute to positive traffic and market share gains, with expectations for Walmart to maintain a constructive outlook throughout the year.
While Walmart typically does not revise its full-year EPS and comp guidance in the first quarter, Evercore ISI predicts a positive tone from the company regarding the underlying momentum in its business operations.
Internationally, Walmart's operations continue to exhibit strong double-digit comp growth, with industry commentary suggesting that the company's ongoing market share gains may be undervalued by investors.
The analysts do not foresee deflation as a likely scenario, projecting that comps could accelerate in the second half of the year based on improving trends identified in their Retail Sector Leading Indicator (RSLI).
The improving organic growth framework, coupled with a return to domestic square footage expansion, is expected to keep Walmart's revenue trends ahead of the broader retail sector.
Evercore ISI sees near-term share price upside to the mid-to-high $60 range and an upward bias to consensus expectations, indicating a positive outlook for Walmart's stock performance.
InvestingPro Insights
As Walmart (NYSE:WMT) gears up for its earnings report on May 16, real-time data from InvestingPro offers a deeper dive into the financial health and market position of the company. With a robust market capitalization of $487.46 billion and a P/E ratio standing at 31.5, Walmart showcases its significant presence in the retail sector. The company's revenue growth over the last twelve months as of Q4 2024 has been solid at 6.03%, indicating sustained business expansion.
InvestingPro Tips highlight Walmart's remarkable streak of raising its dividend for 29 consecutive years, showcasing a strong commitment to shareholder returns. This consistency is further illustrated by the company's 52 years of maintained dividend payments. Additionally, Walmart's stock is recognized for trading with low price volatility, providing a sense of stability for investors. For those looking to explore more about Walmart's financial metrics and stock performance, InvestingPro features 12 additional tips that can offer valuable insights.
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