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Walmart & Alibaba Earnings: What Can Investors Expect?
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The 2024 Q2 earnings season is slowly winding down, which has remained positive and uplifting. Earnings growth is on pace to be positive yet again, with the trend expected to continue in the upcoming Q3 cycle.
This week, several notable companies – Walmart (WMT - Free Report) and Alibaba (BABA - Free Report) – both report quarterly results. Both companies have established themselves as serious players in the eCommerce space, though it’s worth noting that WMT is still relatively in the early phases of its digital efforts.
Both reports will also give us a deeper understanding of the consumer's current state. Let’s take a closer look at how each stacks up.
Walmart Enjoys Profitability Boost
Retail titan Walmart, a current Zacks Rank #2 (Buy), has seen its digital efforts pay off nicely, aiding its quarterly results in a big way over the last few quarters. Shares have been strong year-to-date, gaining more than 30%.
Recent quarterly results have boosted shares, as shown below.
Image Source: Zacks Investment Research
Global eCommerce sales throughout its latest period grew 21% year-over-year, reflecting yet again another strong quarter for the company in the metric. In addition, eCommerce penetration was higher across all its markets throughout its latest period.
The metric will undoubtedly be again in focus in the upcoming print, as favorable results would further confirm its eCommerce momentum. Keep in mind that store pickups are also included in the company’s eCommerce sales.
The company’s profitability has improved nicely over recent periods amid cost efficiencies that have led to margin expansion, as shown below. Please keep in mind that the chart is on a trailing twelve-month basis.
Image Source: Zacks Investment Research
WMT’s quarterly release reflects one of the most critical for retail overall. The company’s value proposition allows it to enjoy consistent demand among lower-end consumers, with higher-end consumers also ‘trading down’ during periods of financial distress. Market share gains in its U.S. locations throughout its latest period were primarily driven by upper-income households.
It’s worth noting that valuation multiples are elevated heading into the release, with the current 26.6X forward 12-month earnings multiple well above the 23.3X five-year median. The stock carries a Value Style Score of ‘C.’
Image Source: Zacks Investment Research
Earnings and revenue expectations haven’t budged over the last several months, with the retail titan expected to post 6.5% earnings growth on 4% higher sales.
Alibaba's Cloud Efforts in Focus
Alibaba shares have seen back-and-forth action in 2024, up nearly 7% overall and seeing mixed post-earnings reactions. From a longer-term perspective, the stock has been somewhat frustrating to own in general, down 55% over the last three years and regularly seeing elevated volatility given its China exposure.
Image Source: Zacks Investment Research
A key area to watch for in the release will be further commentary surrounding its cloud and AI-related efforts. BABA enjoyed a favorable period concerning its efforts in its latest release, stating, ‘During the quarter, our core public cloud offerings, which include products such as elastic compute, database and AI products, recorded double-digit year-over-year growth in revenue.’
Though BABA’s cash-generating abilities have taken a hit, it’s critical to note that increased capital expenditures geared toward its cloud infrastructure are behind the decline. Free cash flow fell 50% year-over-year throughout its latest period. Favorable commentary surrounding its investments in its cloud will undoubtedly be a positive, potentially sparking a positive post-earnings move.
The stock is currently a Zacks Rank #4 (Sell), with the revisions trend for the upcoming release reflecting bearishness among analysts.
Image Source: Zacks Investment Research
Bottom Line
We’ll hear from many notable companies this week, a list that includes Walmart (WMT - Free Report) and Alibaba (BABA - Free Report) .
Regarding Walmart, investors should focus on its eCommerce results, which have greatly aided the company over recent quarters thanks to strong growth. Keep in mind that the company sits in a ‘sweet spot,’ with its value proposition consistently appealing to lower-end consumers while also attracting higher-end consumers during pinches.
Concerning Alibaba, the company’s cloud and AI efforts will likely be a focus point, with the company investing heavily in the efforts. Gross Merchandise Volume (GMV) will also be key, letting us know more about the current state of the consumer.
Given Alibaba’s unfavorable Zacks Rank #4 (Sell) and Walmart’s Zacks Rank #2 (Buy), WMT shares are currently more attractive than BABA heading into the release.
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Walmart & Alibaba Earnings: What Can Investors Expect?
The 2024 Q2 earnings season is slowly winding down, which has remained positive and uplifting. Earnings growth is on pace to be positive yet again, with the trend expected to continue in the upcoming Q3 cycle.
This week, several notable companies – Walmart (WMT - Free Report) and Alibaba (BABA - Free Report) – both report quarterly results. Both companies have established themselves as serious players in the eCommerce space, though it’s worth noting that WMT is still relatively in the early phases of its digital efforts.
Both reports will also give us a deeper understanding of the consumer's current state. Let’s take a closer look at how each stacks up.
Walmart Enjoys Profitability Boost
Retail titan Walmart, a current Zacks Rank #2 (Buy), has seen its digital efforts pay off nicely, aiding its quarterly results in a big way over the last few quarters. Shares have been strong year-to-date, gaining more than 30%.
Recent quarterly results have boosted shares, as shown below.
Image Source: Zacks Investment Research
Global eCommerce sales throughout its latest period grew 21% year-over-year, reflecting yet again another strong quarter for the company in the metric. In addition, eCommerce penetration was higher across all its markets throughout its latest period.
The metric will undoubtedly be again in focus in the upcoming print, as favorable results would further confirm its eCommerce momentum. Keep in mind that store pickups are also included in the company’s eCommerce sales.
The company’s profitability has improved nicely over recent periods amid cost efficiencies that have led to margin expansion, as shown below. Please keep in mind that the chart is on a trailing twelve-month basis.
Image Source: Zacks Investment Research
WMT’s quarterly release reflects one of the most critical for retail overall. The company’s value proposition allows it to enjoy consistent demand among lower-end consumers, with higher-end consumers also ‘trading down’ during periods of financial distress. Market share gains in its U.S. locations throughout its latest period were primarily driven by upper-income households.
It’s worth noting that valuation multiples are elevated heading into the release, with the current 26.6X forward 12-month earnings multiple well above the 23.3X five-year median. The stock carries a Value Style Score of ‘C.’
Image Source: Zacks Investment Research
Earnings and revenue expectations haven’t budged over the last several months, with the retail titan expected to post 6.5% earnings growth on 4% higher sales.
Alibaba's Cloud Efforts in Focus
Alibaba shares have seen back-and-forth action in 2024, up nearly 7% overall and seeing mixed post-earnings reactions. From a longer-term perspective, the stock has been somewhat frustrating to own in general, down 55% over the last three years and regularly seeing elevated volatility given its China exposure.
Image Source: Zacks Investment Research
A key area to watch for in the release will be further commentary surrounding its cloud and AI-related efforts. BABA enjoyed a favorable period concerning its efforts in its latest release, stating, ‘During the quarter, our core public cloud offerings, which include products such as elastic compute, database and AI products, recorded double-digit year-over-year growth in revenue.’
Though BABA’s cash-generating abilities have taken a hit, it’s critical to note that increased capital expenditures geared toward its cloud infrastructure are behind the decline. Free cash flow fell 50% year-over-year throughout its latest period. Favorable commentary surrounding its investments in its cloud will undoubtedly be a positive, potentially sparking a positive post-earnings move.
The stock is currently a Zacks Rank #4 (Sell), with the revisions trend for the upcoming release reflecting bearishness among analysts.
Image Source: Zacks Investment Research
Bottom Line
We’ll hear from many notable companies this week, a list that includes Walmart (WMT - Free Report) and Alibaba (BABA - Free Report) .
Regarding Walmart, investors should focus on its eCommerce results, which have greatly aided the company over recent quarters thanks to strong growth. Keep in mind that the company sits in a ‘sweet spot,’ with its value proposition consistently appealing to lower-end consumers while also attracting higher-end consumers during pinches.
Concerning Alibaba, the company’s cloud and AI efforts will likely be a focus point, with the company investing heavily in the efforts. Gross Merchandise Volume (GMV) will also be key, letting us know more about the current state of the consumer.
Given Alibaba’s unfavorable Zacks Rank #4 (Sell) and Walmart’s Zacks Rank #2 (Buy), WMT shares are currently more attractive than BABA heading into the release.