Walmart Stock Likely To See Little Movement Post Q1

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WMT: Walmart logo
WMT
Walmart

Note: Walmart’s FY’2023 ended in January 2023.

Walmart (NYSE: WMT), the world’s largest retailer, operating discount stores, supercenters, neighborhood markets, and Sam’s Club warehouses, is scheduled to report its fiscal first-quarter results on Thursday, May 18. We expect WMT stock to see little to no movement on a likely revenue and earnings match with consensus in fiscal first-quarter results. Walmart expects a challenging and uncertain year in FY 2024 ahead of inflation and recessionary fears weighing on consumers. In FY 2024, Walmart sees net sales growing by 2.5% to 3%, almost in line with previous years. Its U.S. comp sales are expected to grow (excluding fuel) by about 2% to 2.5% y-o-y. That said, we believe that the company’s performance in e-commerce, Sam’s Club, and other new businesses still make it well-positioned for long-term growth.

Walmart Connect, the company’s digital advertising division, is the company’s most game-changing initiative right now. This is driven by online-shopping traffic at Walmart.com. The retailer’s ad revenue rose by 30% year-over-year (y-o-y) to $2.7 billion in fiscal 2023. These gains occurred despite the current challenging economic environment, which has slowed sales growth for digital ad giants such as Meta Platforms and Alphabet.

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Our forecast indicates that Walmart’s valuation is $153 per share, which is in line with the current market price. Look at our interactive dashboard analysis on WMT’s Earnings Preview: What To Expect in Q1? for more details.

(1) Revenues expected to be in line with consensus estimates

Trefis estimates Walmart’s Q1 2024 revenues to be around $148 Bil, in line with the consensus estimate. In FY 2023, Walmart posted revenue of $611 billion, up 6.7% y-o-y, driven by 6.6% growth in U.S. same-store sales. In addition, its e-commerce revenue in the U.S. increased by 12%, with the Sam’s Club brand also growing sales by a double-digit percentage. This growth was aided by store-fulfilled pickup and delivery as well as advertising. The company said that e-commerce generated more than $80 billion in sales for the full year FY 2023 or 13% of total revenue. We forecast Walmart’s Revenue to be $633.7 billion for fiscal 2024 (year ending Jan 2024).

2) EPS likely to match consensus estimates

WMT’s Q1 2024 earnings per share (EPS) is expected to be $1.32 per Trefis analysis, matching the consensus estimate. While Walmart’s revenue increased at a healthy rate from an already massive base, elevated costs for goods pressured its margins. Its gross margin dropped from 25.1% in fiscal 2022 to 24.1% in fiscal 2023. It was the same story with the operating margin, which fell from 4.5% to 3.3%. 

(3) Stock price estimate to match the current market price

Going by Walmart’s Valuation, with an EPS estimate of around $6.14 and a P/E multiple of 25.0x in fiscal 2024, this translates into a price of $153, which is in line with the current market price.

It is helpful to see how its peers stack up. WMT Peers shows how Walmart’s stock compares against peers on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns May 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 WMT Return -1% 6% 117%
 S&P 500 Return -1% 7% 84%
 Trefis Multi-Strategy Portfolio -2% 6% 234%

[1] Month-to-date and year-to-date as of 5/17/2023
[2] Cumulative total returns since the end of 2016

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