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Could Walmart Stock Rise on Its Fiscal 3Q18 Results?

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Part 3
Could Walmart Stock Rise on Its Fiscal 3Q18 Results? PART 3 OF 6

Why Analysts Expect Walmart’s Fiscal 3Q18 Sales to Rise

What analysts expect

Analysts covering Walmart (WMT) expect the company to report sales of $120.9 billion in fiscal 3Q18, reflecting YoY (year-over-year) growth of 2.3%. Strong sales in its Walmart U.S. (SPY) segment and stellar growth in its Digital segment are projected to drive the company’s top-line growth.

However, softness in the International segment is expected to subdue the company’s growth. Rivals Costco (COST), Target (TGT), Kroger (KR), Aldi, and Lidl are also investing in price to drive traffic, which could hurt Walmart’s top-line growth rate.

Why Analysts Expect Walmart’s Fiscal 3Q18 Sales to Rise

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Analysts expect Target’s 3Q17 sales to improve on a YoY basis, driven by value pricing, enhanced offerings, and higher digital sales. Costco reported strong sales growth as its fiscal 4Q17 sales rose 15.7% YoY.

Factors driving Walmart’s sales

Walmart’s top line is expected to benefit from stellar sales in its e-Commerce segment. The company’s investment in its digital business could strengthen its position against the growing threat from Amazon (AMZN), which is resulting in higher comps growth.

Lower pricing, fresh offerings through supply-chain reinvention, and the addition of trendy brands through acquisitions have attracted consumers to its stores and e-commerce platform.

Walmart’s focus on store remodeling through integrating it with technology could generate higher productivity. As consumers shift to online shopping, Walmart is planning to open fewer stores and invest more in its Digital segment to drive sales growth.

The company expects to open 15 Walmart Supercenters in fiscal 2019 and ten Walmart Neighborhood Markets in the US. Walmart plans to add 255 new stores in international markets, focusing on high-growth markets like China (FXI) and Mexico.

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