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Walmart Exceeds 3Q Earnings Estimate, Guides High

Amit Singh - Author

Nov. 17 2017, Updated 11:44 a.m. ET

Earnings improved for third consecutive quarter

Walmart (WMT) reported stronger-than-expected fiscal 3Q18 earnings for the three-month period that ended October 31, 2017. Its adjusted EPS (earnings per share) of $1 beat analysts’ expectation of $0.97, rising 2% YoY (year-over-year). That’s the third consecutive quarter that the company’s bottom line has improved on a YoY basis.

This comes at a time when retailers and mass merchandisers are struggling to raise their profitability amid heightened competition from Amazon (AMZN). Walmart has surpassed Wall Street’s expectations in the past nine quarters.

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In comparison, rival Target (TGT) also surpassed analysts’ estimates with its fiscal 3Q17 earnings. However, the company’s EPS fell 12.5% YoY due to increased price investments and higher digital fulfillment costs. In contrast, Costco’s (COST) bottom line rose 17.5% YoY, driven by stellar sales and cost-savings from its shift to a co-branded card. However, increased price investments remained a drag on profit margins.

Walmart’s EPS benefited from improved comps (comparables) across all its business segments, especially in the United States (SPY). Favorable currency rates and a lower outstanding share count further supported its bottom-line growth. However, continued investments in price and a mix shift toward e-commerce restricted its bottom-line growth rate.

Guidance raised

Given the company’s healthy performance in the first nine months of the current fiscal year, Walmart raised its fiscal 2018 EPS guidance. It now expects its bottom line to be $4.38–$4.46, compared to its earlier guidance $4.30–$4.40. It expects a strong performance during the key upcoming holiday season, which is expected to boost its bottom-line performance.


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