Can Walmart’s Q4 Earnings Boost Its Stock?

Walmart (NYSE:WMT) is scheduled to release its results for the fourth quarter of fiscal 2020 on Tuesday before the market opens. After the company’s impressive third-quarter results, analysts hope to see better growth in this quarter as well. Currently, Walmart stock is down YTD (year-to-date). A better-than-expected fourth quarter and end to fiscal 2020 could lift the stock. The stock has risen 2.9% in February. Let’s see what analysts expect from Walmart’s fourth-quarter results.

Analysts’ estimates for Walmart’s fourth quarter

Analysts hope to see growth in Walmart’s top line and bottom line in the fourth quarter. An Alpha Street article discussed how a seamless connection between the company’s stores and e-commerce business will benefit its fourth-quarter results. Also, a favorable economic environment could help the company. Amazon (NASDAQ:AMZN) has been giving Walmart tough competition. However, the company has successfully outpaced Amazon in the grocery business due to its online grocery pickup expansion. A boost in online sales has impacted many department stores. Recently, Macy’s (NYSE:M) announced the closure of 125 stores due to a rise in online shopping demands.

To combat the issue, Walmart has been investing heavily in remodeling and technology along with its e-commerce business. Higher domestic market sales, traffic from holiday sales, and expanded e-commerce initiatives will likely drive Walmart’s top-line growth. Analysts expect the company to report a 2.6% rise in its YoY (year-over-year) revenue to $142 billion. Sequentially, the company’s sales could rise by 11.3%. For fiscal 2020, the revenue could increase by 2.0% to $525 billion.

The company’s bottom line could also increase by 1.7% YoY to $1.4 per share. For fiscal 2020, the bottom line could rise by 1.6% to $4.9 per share. The company beat analysts’ earnings estimates in the last three quarters of fiscal 2020. The gross profit margin could decline slightly by 0.03% to 23.7% for the quarter. For fiscal 2020, the gross profit margin could be 24.3%.

Third-quarter performance

Walmart saw a 2.5% YoY rise in its revenue to $128.0 billion due to strong comps growth in the US. International sales also contributed to the growth. However, the revenue missed the estimates. Walmart also saw a 7.4% YoY increase in its EPS. The earnings also beat analysts’ estimates.

Analysts’ recommendations for Walmart

Currently, analysts have a neutral outlook on Walmart stock. There’s a tie between “buy” and “hold” ratings for the stock. Among the 33 analysts covering the stock, 12 recommend a “buy,” 12 recommend a “hold,” and nine recommend a “strong buy.” Analysts’ average target price on the stock is $130.58. The target price implies an 11% upside for the stock based on its closing price of $117.89 on February 14. The stock has seen a 0.8% loss YTD, while Amazon has seen 15.5% gain YTD.

Stay with us to learn more about Walmart after its fourth-quarter results.