Walmart Analysts Break Down Q3 Earnings: 'Well-Positioned To Gain Market Share'

Walmart Inc WMT shares traded mostly flat on Wednesday after the discount retailer reported better-than-expected earnings and said it's well-positioned for the holiday shopping season despite supply chain disruptions.

Walmart reported third-quarter adjusted EPS of $1.45 on revenue of $140.53 billion. Both numbers topped consensus analyst estimates of $1.40 and $135.6 billion. Revenue was up 4% from a year ago.

U.S. same-store sales (excluding fuel) were up 9.2%, beating analyst estimates of 6.9%. U.S. online sales were up 8% from a year ago and 87% compared to 2019. Sam’s Club same-store sales (excluding fuel) were up 13.9%, higher than the 8.7% growth analysts were expecting.

Looking ahead, Walmart raised its full-year EPS forecast from between $6.20 and $6.35 to a new target of $6.40. The company also said inventory levels are up 11.5% ahead of the holiday shopping season.

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Gaining Market Share: Telsey Advisory Group analyst Joseph Feldman said Walmart is “well-positioned to gain market share” thanks to its discount product mix and its integrated omni-channel operation.

“The company is proving successful in operating an efficient, fully integrated omni-channel retail model—given its intense focus on the customer, ability to leverage talent, technology, vendor relationships, and strong financial flexibility—while developing a broader ecosystem, including membership, fulfillment services, digital payment, and advertising,” Feldman wrote.

Raymond James analyst Bobby Griffin said Walmart is positioned to be a long-term winner in the modern retail landscape.

“In addition, we believe Walmart Connect has the potential to be a strong sales and margin contributor (materially higher than WMT's other core businesses once scaled) over the coming years — yielding faster and more consistent EPS growth,” Griffin wrote.
Growth Initiatives On Track: Bank of America analyst Robert Ohmes said Walmart’s core business remains strong, and its growth initiatives are on track.

“We view [a] stock pullback as a particularly attractive buying opp,” Ohmes wrote.

KeyBanc analyst Edward Yruma said conditions appear favorable for Walmart in the fourth quarter, but a shift back to travel and experience spending in 2022 may create headwinds.

“Walmart is navigating inflation well, and is in a strong inventory position heading into the holiday season,” Yruma wrote.

WMT Ratings And Price Targets:

• Telsey Advisory Group has an Outperform rating and $175 target.
• Bank of America has a Buy rating and $190 target.
• Raymond James has an Outperform rating and $170 target.
• KeyBanc has an Overweight rating and $180 target.

The stock trades around $142.35 at press time.