Why Analysts’ Opinion about Walmart Improved after 1Q18 Results
The majority of analysts remain neutral on Walmart (WMT) stock. However, after the company’s strong start to the current fiscal year and continued positive comps growth, the consensus rating has improved.
Walmart (WMT) stock was trading at a 12-month forward PE multiple of 17.9x on May 19, 2017.
Walmart’s (WMT) Sam’s Club reported better-than-expected comps growth in fiscal 1Q18 thanks to the company’s strategic efforts to drive traffic and strong e-commerce sales.
Walmart’s (WMT) US segment continued with its healthy performance in fiscal 1Q18.
Walmart’s (WMT) international segment continues to be impacted by the strong US (SPY) dollar.
Walmart’s (WMT) fiscal 1Q18 sales of $117.5 billion missed the analysts’ estimate marginally.
Despite increased competition from Amazon (AMZN) in the grocery segment, Walmart benefitted from the strategic investments it has made in the past couple of years.
Walmart (WMT) stock rose 5% in the two trading days following the company’s better-than-expected fiscal 1Q18 earnings per share.
Target’s (TGT) muted margins performance in fiscal 1Q17 shouldn’t surprise investors.
The majority of analysts covering Target (TGT) remain neutral on the stock.
Target’s 1Q17 sales of $16.0 billion surpassed analysts’ estimate of $15.6 billion but fell 1.1% YoY (year-over-year).
Target’s investment into store remodeling is showing signs of improvement as newly remodeled stores are already generating healthy sales growth.
Target’s 1Q17 adjusted EPS (earnings per share) of $1.21 surpassed the Wall Street estimate of $0.92.
As of May 16, 2017, Costco was trading at a 12-month forward PE multiple of 28.5x—significantly higher than SPX’s forward PE multiple of 18.8x.
Costco’s (COST) margins are expected to benefit from increased fuel earnings and improved store traffic.
Analysts covering Costco remain positive on the stock, which has a consensus rating of 2.1 on a scale of 1.0 (“strong buy”) to 5.0 (“strong sell”).
For fiscal 3Q17, analysts expect Costco to report adjusted EPS of $1.32, reflecting an increase of 6.5% on a YoY (year-over-year) basis.
Analysts expect Costco (COST) to report sales of $28.5 billion in fiscal 3Q17, which would represent an improvement of 6.4% over fiscal 3Q16.
Costco has outperformed the S&P 500 and the S&P 500 Consumer Staples Index YTD, outpacing Walmart, Target, Dollar Tree, and Kroger (KR) in price gains.
On May 12, 2017, Walmart (WMT) was trading at a 12-month forward PE multiple of 17.5x.