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Walmart Beats Third-Quarter EPS Estimate, Raises Guidance

Amit Singh - Author

Nov. 16 2018, Published 8:27 a.m. ET

Quarterly performance

Walmart (WMT) reported better-than-expected third-quarter bottom-line results on November 15—the period ending on October 31. Walmart’s adjusted EPS of $1.08 beat analysts’ expectation of $1.01 and increased 8.0% on a YoY (year-over-year) basis.

Sustained momentum in underlying sales, a lower effective tax rate, the decline in interest costs, and a lower outstanding share count supported the company’s bottom-line growth. However, an investment in price, an unfavorable mix, and increased transportation costs had a negative impact on Walmart’s bottom-line growth.

Walmart’s gross margin decreased by 21 basis points, which reflected increased transportation costs and price investments in certain markets. An unfavorable mix, driven by increased e-commerce sales, also pressured the company’s margins.

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In comparison, analysts expect Target (TGT) to report strong growth in its EPS during the third quarter. The lower effective tax rate and strong sales growth expectations will likely support Target’s bottom-line growth. Costco’s (COST) bottom line is also projected to grow at a healthy rate. However, price investments and a negative mix could still be a drag on the bottom line.


Better-than-expected third-quarter earnings led Walmart’s management to increase the EPS outlook for 2018. Walmart expects its bottom line to be $4.75–$4.85. Previously, management expected the company’s adjusted EPS to be $4.65–$4.80.


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