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Could Walmart Stock Rise on Its Fiscal 3Q18 Results?

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Part 2
Could Walmart Stock Rise on Its Fiscal 3Q18 Results? PART 2 OF 6

Could Walmart’s Fiscal 3Q18 EPS Improve? Analysts Think Otherwise

Consensus estimate

Walmart (WMT) plans to announce its fiscal 3Q18 earnings on Thursday, November 16, 2017. The company reported improved bottom-line performance in fiscal 1H18 with its earnings per share (or EPS) marking YoY (year-over-year) growth in both fiscal 1Q18 and fiscal 2Q18.

Given the company’s healthy sales trends and efforts to drive store traffic, Walmart could report a YoY improvement in its bottom line in fiscal 3Q18. However, analysts think otherwise. Wall Street expects Walmart to post EPS of $0.97 in fiscal 3Q18, down 1.0% on a YoY basis.

Could Walmart’s Fiscal 3Q18 EPS Improve? Analysts Think Otherwise

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Increased investments are expected to offset the leverage from higher sales. Notably, Walmart has exceeded the analysts’ EPS expectations for the past eight consecutive quarters.

In comparison, analysts expect lower pricing and increased business investments to take a toll on rival Target’s (TGT) 3Q17 EPS. Analysts project a double-digit decline in the company’s bottom-line result. However, Costco (COST) reported 17.5% YoY growth in its EPS during the last reported quarter.

Guidance

Walmart (WMT) expects its fiscal 3Q18 EPS to be $0.90–$0.98. Meanwhile, its fiscal 2018 adjusted EPS is estimated to be $4.30–$4.40. Walmart’s strong performance in its US (SPY) segment, driven by the rise in store traffic, is anticipated to boost the company’s bottom line.

Surging e-commerce sales are expected to cushion Walmart’s profitability. However, value pricing, increased competition from Amazon (AMZN), and investments in growth initiatives are expected to subdue its growth.

Nevertheless, Walmart remains upbeat and expects its bottom line to improve, driven by higher sales in stores and its e-commerce platform. The company estimates a 5.0% improvement in its EPS for fiscal 2019.

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