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Walmart (WMT) Q3 Earnings Likely to Gain on E-Commerce Strength
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Walmart Inc. (WMT - Free Report) is ready to report third-quarter fiscal 2024 earnings on Nov 16. It is worth taking a closer look at the company’s e-commerce business, which formed 15% of the company’s overall net sales in the second quarter. We believe that the e-commerce business is likely to have played a key role in determining the company’s performance in the quarter under review.
E-Commerce, a Key Driver
Walmart’s e-commerce business and omnichannel penetration have been increasing for a while. The company has been taking several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems. WMT is innovating in the supply chain and adding capacity as well as building businesses, such as Walmart GoLocal, Walmart Connect, Walmart Luminate, Walmart+ and Walmart Fulfillment Services.
Walmart’s other notable strides include the buyout of a major stake in Flipkart, which has been bolstering its International segment. Walmart’s majority stake in India’s digital transaction platform, PhonePe, is also worth mentioning. Additionally, Walmart is making aggressive efforts to expand in the booming online grocery space, which has long been a major contributor to e-commerce sales.
Walmart has significantly bolstered its delivery capabilities, as exemplified by its partnership with Salesforce, the expansion of the InHome delivery service, investments in DroneUp, the launch of the Walmart+ membership program and a pilot with Cruise to test grocery delivery through self-driven all-electric cars. Preceding these endeavors, Walmart introduced Express Delivery in April 2021. Additionally, the acquisition of Parcel in September 2017 was a strategic move to elevate its delivery service. The company’s store and curbside pickup options add to customers’ convenience.
As of the second quarter of fiscal 2024, Walmart U.S. had nearly 4,600 pickup locations and more than 4,000 same-day delivery stores. In the second quarter, e-commerce sales surged 24% globally on omnichannel strength, including pickup and delivery. U.S. e-commerce sales rose 24%, driven by strength in pickup & delivery and advertising. The International segment’s e-commerce sales ascended 26% on store-fulfilled strength. At Sam’s Club, e-commerce sales jumped 18% on strong curbside performance.
The benefits of these upsides are likely to have driven Walmart’s e-commerce sales, thereby boosting revenues in the quarter under review.
Walmart’s robust comparable sales have been a driver. However, high SG&A expenses have been a concern. Walmart’s SG&A expenses increased year over year and also deleveraged 33 bps as a percentage of sales in the second quarter. This was accountable to increased variable pay expenses, costs related to tech investments and elevated store remodel costs in the United States. Walmart expects variable pay expenses to have increased year over year in the third quarter as well.
How Are Estimates Shaping Up?
The Zacks Consensus Estimate for third-quarter revenues is pegged at $159.4 million, suggesting an increase of 4.3% from the prior-year quarter’s reported figure. The consensus mark for quarterly earnings has risen by a penny in the past 30 days to $1.51 per share. This indicates growth of 0.7% from the year-ago quarter’s reported figure. WMT has a trailing four-quarter earnings surprise of 11.6%, on average.
Walmart carries a Zacks Rank #2 (Buy) and has an Earnings ESP of +0.81%. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) increases the chances of an earnings beat, which is the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks With the Favorable Combination
Here are three other companies worth considering as our model shows that these also have the correct combination to beat on earnings this time:
Costco Wholesale (COST - Free Report) currently has an Earnings ESP of +4.26% and a Zacks Rank #2. The company is likely to register top-and-bottom-line growth when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for Costco’s quarterly revenues is pegged at $57.7 billion, indicating a rise of nearly 6% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Costco’s quarterly EPS of $3.43 suggests an increase of 10.7% from the year-ago quarter’s levels. COST has a trailing four-quarter earnings surprise of 2.1%, on average.
Ross Stores (ROST - Free Report) has an Earnings ESP of +2.08% and a Zacks Rank #2. The company is slated to witness top-and-bottom-line growth when it reports third-quarter fiscal 2023 results. The Zacks Consensus Estimate for ROST’s quarterly revenues is pegged at $4.8 billion, which suggests growth of 5.8% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Ross Stores’ quarterly EPS has remained unchanged in the past 30 days at $1.21, which suggests an increase of 21% from the year-ago quarter’s level. ROST has a trailing four-quarter earnings surprise of 11.4%, on average.
Kohl's Corporation (KSS - Free Report) currently has an Earnings ESP of +3.46% and a Zacks Rank of 3. The company is likely to register decreases in the top and bottom lines when it reports third-quarter fiscal 2023 results. The Zacks Consensus Estimate for Kohl's quarterly revenues is pegged at $4.1 billion, suggesting a decline of roughly 4% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Kohl's quarterly earnings has increased by 2 cents in the past seven days to 35 cents per share, which indicates a 57.3% decline from the year-ago quarter's reported number. KSS delivered a negative earnings surprise of 23.6%, on average, in the trailing four quarters.
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Walmart (WMT) Q3 Earnings Likely to Gain on E-Commerce Strength
Walmart Inc. (WMT - Free Report) is ready to report third-quarter fiscal 2024 earnings on Nov 16. It is worth taking a closer look at the company’s e-commerce business, which formed 15% of the company’s overall net sales in the second quarter. We believe that the e-commerce business is likely to have played a key role in determining the company’s performance in the quarter under review.
E-Commerce, a Key Driver
Walmart’s e-commerce business and omnichannel penetration have been increasing for a while. The company has been taking several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems. WMT is innovating in the supply chain and adding capacity as well as building businesses, such as Walmart GoLocal, Walmart Connect, Walmart Luminate, Walmart+ and Walmart Fulfillment Services.
Walmart’s other notable strides include the buyout of a major stake in Flipkart, which has been bolstering its International segment. Walmart’s majority stake in India’s digital transaction platform, PhonePe, is also worth mentioning. Additionally, Walmart is making aggressive efforts to expand in the booming online grocery space, which has long been a major contributor to e-commerce sales.
Walmart has significantly bolstered its delivery capabilities, as exemplified by its partnership with Salesforce, the expansion of the InHome delivery service, investments in DroneUp, the launch of the Walmart+ membership program and a pilot with Cruise to test grocery delivery through self-driven all-electric cars. Preceding these endeavors, Walmart introduced Express Delivery in April 2021. Additionally, the acquisition of Parcel in September 2017 was a strategic move to elevate its delivery service. The company’s store and curbside pickup options add to customers’ convenience.
As of the second quarter of fiscal 2024, Walmart U.S. had nearly 4,600 pickup locations and more than 4,000 same-day delivery stores. In the second quarter, e-commerce sales surged 24% globally on omnichannel strength, including pickup and delivery. U.S. e-commerce sales rose 24%, driven by strength in pickup & delivery and advertising. The International segment’s e-commerce sales ascended 26% on store-fulfilled strength. At Sam’s Club, e-commerce sales jumped 18% on strong curbside performance.
The benefits of these upsides are likely to have driven Walmart’s e-commerce sales, thereby boosting revenues in the quarter under review.
Walmart Inc. Price, Consensus and EPS Surprise
Walmart Inc. price-consensus-eps-surprise-chart | Walmart Inc. Quote
Other Factors
Walmart’s robust comparable sales have been a driver. However, high SG&A expenses have been a concern. Walmart’s SG&A expenses increased year over year and also deleveraged 33 bps as a percentage of sales in the second quarter. This was accountable to increased variable pay expenses, costs related to tech investments and elevated store remodel costs in the United States. Walmart expects variable pay expenses to have increased year over year in the third quarter as well.
How Are Estimates Shaping Up?
The Zacks Consensus Estimate for third-quarter revenues is pegged at $159.4 million, suggesting an increase of 4.3% from the prior-year quarter’s reported figure. The consensus mark for quarterly earnings has risen by a penny in the past 30 days to $1.51 per share. This indicates growth of 0.7% from the year-ago quarter’s reported figure. WMT has a trailing four-quarter earnings surprise of 11.6%, on average.
Walmart carries a Zacks Rank #2 (Buy) and has an Earnings ESP of +0.81%. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) increases the chances of an earnings beat, which is the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks With the Favorable Combination
Here are three other companies worth considering as our model shows that these also have the correct combination to beat on earnings this time:
Costco Wholesale (COST - Free Report) currently has an Earnings ESP of +4.26% and a Zacks Rank #2. The company is likely to register top-and-bottom-line growth when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for Costco’s quarterly revenues is pegged at $57.7 billion, indicating a rise of nearly 6% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Costco’s quarterly EPS of $3.43 suggests an increase of 10.7% from the year-ago quarter’s levels. COST has a trailing four-quarter earnings surprise of 2.1%, on average.
Ross Stores (ROST - Free Report) has an Earnings ESP of +2.08% and a Zacks Rank #2. The company is slated to witness top-and-bottom-line growth when it reports third-quarter fiscal 2023 results. The Zacks Consensus Estimate for ROST’s quarterly revenues is pegged at $4.8 billion, which suggests growth of 5.8% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Ross Stores’ quarterly EPS has remained unchanged in the past 30 days at $1.21, which suggests an increase of 21% from the year-ago quarter’s level. ROST has a trailing four-quarter earnings surprise of 11.4%, on average.
Kohl's Corporation (KSS - Free Report) currently has an Earnings ESP of +3.46% and a Zacks Rank of 3. The company is likely to register decreases in the top and bottom lines when it reports third-quarter fiscal 2023 results. The Zacks Consensus Estimate for Kohl's quarterly revenues is pegged at $4.1 billion, suggesting a decline of roughly 4% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Kohl's quarterly earnings has increased by 2 cents in the past seven days to 35 cents per share, which indicates a 57.3% decline from the year-ago quarter's reported number. KSS delivered a negative earnings surprise of 23.6%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.