Walmart Inc. share price rallies on improved results outlook
Walmart earnings, while in decline, have beat ‘The Street’ with a positive revision for FY23.
Walmart Inc. Results for fiscal period Q2 2023
Walmart Inc., the world’s second largest retailer (after Amazon), has posted results for the second fiscal quarter of 2023 (Q2 2023).
Financial Highlights for Q2 2023 (vs Q2 2022) are as follows:
- Revenue up 8.4% year-on-year (YoY)
- Walmart US Comp sales up 6.5%
- E-Commerce sales up 12%
- Earnings Per Share (EPS) $1.77, down 0.58% year-on-year
Comments on results
Sales growth for the group was led by the Global advertising business (+30%) and E-Commerce sales (+12%). US comparable sales were robust adding 6.5% over the reporting period.
Walmart earnings of $1.77 per share (EPS), while showing a marginal drop (0.54%) against the prior year’s comparative period, were well ahead of consensus estimates which had predicted $1.62 for the reporting period.
A higher proportion of grocery sales (where the group is increasing its US market share) relative to group sales, has in part eroded profit margins. Walmart also continues to sit with very high inventory levels, particularly in the home electronics and apparel divisions. The group has highlighted this as a problem area and is focused on lowering levels over the next quarter.
Forward guidance
The outlook for the company’s full year results has improved although adjusted earnings could see a double digit decline in FY23.
A summary of Walmart's forward guidance for the fiscal year is as follows:
- Consolidated net sales growth is expected to be around 4.5%
- Walmart U.S. comp sales growth, excluding fuel, to increase by 4%
- Consolidated adjusted operating income is expected to decline by between 9.0% to 11.0%
- Adjusted earnings per share are expected to decline by between 9.0% to 11.0%
Broker ratings and price targets
As of the 16th August 2022 a consensus of 41 analysts surveyed by Refinitiv suggests a buy rating for Walmart with a price target of $143.10. While this price target is only 2% higher than the last traded price, the better than expected results and forward guidance could see estimates re-rating higher in the near-term.
Walmart Inc. – Technical View
The share price of Walmart has broken out of a medium--term range between levels 118.40 (support) and 132.75 (resistance). The next level of resistance at 148.15 provides the next resistance target from the upside breakout. Traders who missed the initial move higher might prefer looking for the first pullback for long entry.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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