Walmart Analysts Break Down Q1 Beat: 'Impressive Results Against Tough Comparisons'

Walmart Inc WMT reported a big first-quarter earnings beat driven by online and grocery sales growth.

On Tuesday morning, Walmart reported a first-quarter EPS of $1.69 on revenue of $138.3 billion. Both numbers exceeded consensus analyst estimates of $1.21 and $131.9 billion, respectively. Revenue was up 3% from a year ago.

U.S. same-store sales growth in the quarter was up 6%, exceeding analyst estimates of 0.9% growth. U.S. e-commerce sales were up 37%.

Total transactions were down 3.2% from a year ago, but average ticket size was up 9.5%.

Sam’s Club same-store sales were up 7.2% excluding fuel, beating analyst estimates of 1.2% growth.

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Beat And Raise: RBC Capital Markets analyst Scot Ciccarelli said Walmart reported “impressive results against tough comparisons” and expects more big numbers in coming quarters.

“We believe profitability was boosted by temporary factors like mix (thanks stimulus) but, more importantly from moderation in incremental investment spending and structural improvements to the profitability from their e-commerce operations,” Ciccarelli wrote in a note.

Telsey Advisory Group analyst Joseph Feldman said Walmart’s guidance was also impressive.

“For 2021, Walmart now forecasts EPS growth of HSD, up from the prior outlook for a slight decline, vs. $5.48 in 2020, with an unchanged Walmart US and Sam’s Club, exfuel, comp of LSD, which may prove conservative,” Feldman wrote.

Online Sales Resilient: KeyBanc analyst Edward Yruma said 37% online sales growth was particularly strong given a recovery in in-store traffic.

“Mix shift should serve as a gross margin tailwind, and we think modest inflationary pressures should benefit WMT given its strong value orientation,” Yruma wrote.

Morgan Stanley analyst Simeon Gutman said Walmart appears to be back to gaining market share in its Grocery business.

“WMT's results suggest consumers are reverting to pre-pandemic shopping habits (at least to a degree) and this could position WMT to return to ~1-2% comp outperformance vs the Food Retail industry post-pandemic,” Gutman wrote.

WMT Ratings And Price Targets:

• RBC has an Outperform rating and $173 target.
• Telsey has an Outperform rating and $170 target.
• KeyBanc has an Overweight rating and $180 target.
• Morgan Stanley has an Overweight rating and $160 target.

Walmart's stockt raded around $142 per share at publication time.

Photo courtesy of Mike Mozart/Wikimedia.