Strong EPS history
Historically, Walmart’s (WMT) bottom-line performance has been impressive despite strong margin headwinds. The company’s EPS have exceeded analysts’ expectations in the past five quarters and have grown YoY (year-over-year).
Walmart started the year on a strong note as its bottom line rose 14.0% during the fiscal first quarter. In the fiscal second quarter, analysts expect the company to sustain that growth momentum and for its EPS to grow 13% YoY to $1.22.
Factors expected to affect Walmart’s EPS
In fiscal Q2 2018, Walmart’s bottom line is anticipated to benefit from its comparable-store sales improving. A significant decline in its effective tax rate is also expected to be a key growth driver. However, the company’s price investments, other growth measures, and higher logistics and freight costs are expected to slow its EPS growth.
In comparison, peers Target (TGT) and Costco (COST) have also impressed investors with their EPS growth. Target’s bottom line has returned to growth and is expected to grow at a double-digit rate in fiscal 2018, thanks to its sales improving and lower tax. Meanwhile, Costco’s EPS have grown at a double-digit rate, much more than Walmart’s and Target’s, in the past five quarters. Analysts expect Costco to end fiscal 2018 on a strong note, maintaining its stellar EPS growth.