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Will Walmart Beat Analysts’ Earnings Estimate in Q1?

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Analysts’ consensus estimate

Analysts expect Walmart (WMT) to post an adjusted EPS of $1.02 in the first quarter. Walmart’s bottom line will likely mark a decline of 10.5% YoY (year-over-year). Analysts expect margin headwinds to limit the company’s EPS growth. Dilution from Flipkart’s acquisition is expected to hurt the earnings growth rate.

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In comparison, analysts expect Target (TGT) to report high single-digit growth in its EPS during the first quarter. Improved comparable sales and share buybacks are expected to drive Target’s bottom line. Costco’s (COST) bottom line is expected to benefit from solid sales growth, increased membership fee income, and tighter cost management.

Factors to impact Walmart’s bottom line

Walmart’s first-quarter bottom line is expected to benefit from improved sales in the base business. Higher comps and the lower outstanding share count are expected to support the company’s earnings. Excluding the dilution from Flipkart’s acquisition, Walmart’s bottom line is expected increase on a YoY basis.

However, Walmart’s continued investment in price, an unfavorable mix due to growing e-commerce sales, and increased transportation costs are expected to hurt the company’s gross margins and first-quarter EPS.

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