Walmart analyst calls retail stock a ‘beaten-down, risen-up story’ – Walmart (NYSE:WMT)

Retail giant Walmart Inc WMT could give analysts and investors a better picture of the impact of inflation on consumer spending and shopping habits when it releases second-quarter financial results before the market opens on Thursday.

Profit estimates: Analysts are forecasting Walmart’s second-quarter revenue to be $168.57 billion, according to Benzinga Pro data.

The company reported revenue of $161.63 billion in the second quarter of last year. Walmart has beaten analyst estimates for 17 consecutive quarters.

Analysts expect Walmart to report second-quarter earnings per share of 64 cents, down from 61 cents per share reported in the second quarter last year. Walmart has beaten analysts’ earnings per share estimates in eight of the last 10 quarters. It has beaten or met estimates in eight consecutive quarters.

Walmart’s forecast is for second-quarter earnings per share of 62 cents to 65 cents.

The earnings report sees Walmart shares up 30% year-over-year, as you can see in the chart below from Benzinga Pro, outperforming many broad stock indexes.

Also Read: Benzinga’s ‘Stock Whisper’ Index: 5 Stocks Investors Are Secretly Monitoring But Aren’t Talking About Yet

What the experts say: JPMorgan analyst Christopher Horvers said in a recent note to investors that Walmart could prove to be a “safe haven in weak markets.”

The analyst has an Overweight rating and an $81 price target. Walmart could beat earnings estimates and raise forecasts, a rare occurrence in the retail sector in recent years, Horvers said.

“Defense and offense win championships,” he added.

The analyst said there is an increased risk that Walmart investors will be concerned about a potential decline in consumption.

“Our Nielsen analysis in mid-July suggested growth in U.S. grocery comparisons, while value players continue to gain share and grocery price differentials widen.”

Horvers said there is a chance that Walmart is being cautious with its revenue guidance for the second half of 2024.

“WMT is probably one of the few beat-and-raise stories in retail, it continues to rally, it’s a safe stock.”

Placer.ai data points to potentially more customers in the second quarter, which saw visits increase 3.9% for Walmart and 7.5% for Sam’s Club compared with a year earlier.

Jay Woods, chief global strategist at Freedom Capital Markets, named Walmart as one of the most important earnings reports of the week while discussing technical analysis of the stock in his weekly newsletter.

“Walmart remains the cream of the crop in the retail and consumer goods world,” Woods said.

Woods said the hope for Walmart is that it can break the trend in which the stock has outperformed earnings and then failed to see its share price rise again.

“The downside is that when companies don’t meet expectations, they tend to fail quickly and test key support areas.”

Key things to look out for: Walmart’s earnings report can provide key commentary on consumer purchasing trends, including order volume, the shift from private label to private label, and more.

As inflation concerns ease, Walmart could shed light on whether that means an increase in sales of higher-priced items.

Walmart’s e-commerce sales could be another key piece to watch. The company reported a 21% increase in e-commerce sales in the first quarter.

Walmart also reported a 24% increase in ad revenue in the first quarter. That could also be a key item to watch in Thursday’s report.

WMT price action: Walmart shares were trading at $68.44 on Wednesday, while its 52-week price range is $49.85 to $71.33.

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