Up 7% Already This Year , Where Is Walmart Stock Headed Post Q4 Results?

-9.90%
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60.14
Market
54.18
Trefis
WMT: Walmart logo
WMT
Walmart

Note: Walmart’s FY’2024 ended in January 2024.

Walmart (NYSE: WMT), the world’s largest retailer (by revenue), operating discount stores, supercenters, neighborhood markets, and Sam’s Club warehouses, is scheduled to report its fiscal fourth-quarter results on Tuesday, February 20. We expect WMT stock to likely see little to no movement with revenue beating and earnings missing consensus marginally in fiscal fourth-quarter results. For the full year 2024 sales are expected to increase by 5% to 5.5% (from $605.9 billion in FY’23) and adjusted earnings per share are forecasted to range from $6.40 to $6.48 (compared to $6.29 in FY’23). It should be noted that Walmart owes $55.4 billion in debt and has $12.2 billion in cash and cash equivalents at present. With financing rates significantly higher than in previous years, this significant debt not only increases long-term risk for the retailer but also increases interest costs. In addition, the company is seeing slowing U.S. comparable sales growth this year. The company saw 7.4% U.S. comp sales growth in Q1’24 followed by 6.4% in Q2’24 and 4.9% in Q3’24. It will be interesting to see if the company continues this trend in the upcoming Q4 results.

WMT stock has witnessed gains of 15% from levels of $145 in early January 2021 to around current levels, vs. an increase of about 35% for the S&P 500 over this roughly 3-year period. However, the increase in WMT stock has been far from consistent. Returns for the stock were 0% in 2021, -2% in 2022, and 11% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 – indicating that WMT underperformed the S&P in 2021 and 2023. In fact, consistently beating the S&P 500 – in good times and bad – has been difficult over recent years for individual stocks; for other heavyweights in the Consumer Staples sector including PG, COST, and KO, and even for the megacap stars GOOG, TSLA, and MSFT. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could WMT face a similar situation as it did in 2021 and 2023 and underperform the S&P over the next 12 months – or will it see a strong jump?

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Our forecast indicates that Walmart’s valuation is $163 per share, almost in line with the current market price. Look at our interactive dashboard analysis on WMT’s Earnings Preview: What To Expect in Q4? for more details.

(1) Revenues expected to be slightly above consensus estimates

Trefis estimates Walmart’s Q4 2024 revenues to be around $160.1 Bil, marginally above the consensus estimate. In Q3 2024, Walmart posted revenue of $160.8 billion, up 5.2% y-o-y, driven by 4.9% growth in U.S. same-store sales. Transactions were up 3.4% during the quarter, and the average ticket was 1.5% higher. E-commerce contribution to comparable sales was down 300 basis points from a year ago as the post-pandemic shift continued. We forecast Walmart’s Revenue to be around $638 billion for fiscal 2024.

2) EPS likely to marginally miss consensus estimates

WMT’s Q4 2024 earnings per share (EPS) is expected to be $1.51 per Trefis analysis, slightly missing the consensus estimate. The retailer’s consolidated operating income was up 3% in Q3 2024. Consequently, EPS rose 2.0% y-o-y to $1.53 in Q3 2024.

(3) Stock price estimate aligns with the current market price

Going by Walmart’s Valuation, with an EPS estimate of around $5.29 and a P/E multiple of 30.8x in fiscal 2024, this translates into a price of $163, which is almost 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.

 Returns Feb 2024
MTD [1]
Since start
of 2023 [1]
2017-24
Total [2]
 WMT Return 3% 20% 146%
 S&P 500 Return 3% 30% 124%
 Trefis Reinforced Value Portfolio 3% 41% 627%

[1] Returns as of 2/19/2024
[2] Cumulative total returns since the end of 2016

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