Here's What Wall Street Experts Say About Walmart Ahead Of Earnings

Walmart (WMT) is scheduled to report results of its fourth-quarter before the market open on Thursday, February 17, with a conference call scheduled for 8:00 am EDT. What to watch for:

1. GUIDANCE: In November, Walmart raised its fiscal 2022 adjusted earnings per share view to $6.40 from $6.20-$6.35. At the time, the consensus was $6.33, but that has since ticked higher to $6.42. Walmart also forecast FY22 U.S. comparable sales up 6% and capital expenditures for the year of $22B. Walmart said it had seen a "good start" to the fourth quarter, and forecast U.S. comp sales up around 5% excluding fuel.

Ahead of the earnings report, Oppenheimer analyst Rupesh Parikh said he expect another solid top-line showing, but has less conviction on the bottom-line upside potential given a variety of headwinds and tailwinds related to COVID-19 and cost pressures. He also expects a below-algorithm and -consensus guide reflecting difficult comparisons, waning stimulus benefits, and cost pressures. Meanwhile, Morgan Stanley analyst Simeon Gutman sees sales upside, with some margin pressure and an in-line to slight EPS beat.

2. ELEVATED DEMAND: RBC Capital analyst Steven Shemesh initiated coverage of Walmart with an Outperform rating and $160 price target on January 27. Shemesh's positive bias is being driven by the belief that consumer demand throughout 2022 will remain elevated relative to historical levels, and that Walmart is among the best positioned in the space to offset the impact of inflation, the analyst told investors in a research note.

3. INFLATION: Truist analyst Scot Ciccarelli initiated coverage of Walmart with a Hold rating and $153 price target on January 12. The company has solid sales momentum and has materially improved its competitive positioning with higher-margin businesses, but inflation may adversely impact some its core customer base, the analyst tells investors in a research note. Ciccarelli adds that some consumer spending may gradually shift away from "goods", making it difficult for Walmart to maintain its sales trajectory.

4. EXECUTIVE CHANGES: Casey Carl, Walmart's top e-commerce executive in the U.S., will leave the company at the end of February, The Wall Street Journal's Sarah Nassauer reported on January 20. According to an internal memo, Tom Ward, an SVP who has led Walmart's efforts to use its stores as hubs for online pickup and delivery orders, will become the company's new head of U.S. e-commerce.

5. WALMART CONNECT, OTHER INITIATIVES: KeyBanc analyst Edward Yruma said his proprietary job postings scrape points to Walmart's prioritization of its Walmart Connect advertising business. In recent weeks, the analyst has observed a slew of promotions and new job postings, driving better industry focus and prioritizing marketplace. Over time, he sees at least a $3B-plus EBITDA opportunity from advertising.

Meanwhile, Walmart is preparing to create its own cryptocurrency and collection of non-fungible tokens, filings with the U.S. Patent and Trademark Office show, setting the stage for meeting its customers in the emerging metaverse, Bloomberg's Brendan Case and Susan Decker reported on January 16.

Earlier in the month, Walmart announced plans to scale its InHome delivery service, going from being available to 6M households to making it accessible to 30M U.S. households by the end of the year. To support the expansion, Walmart plans to hire more than 3,000 associate delivery drivers this year as well as build out a fleet of 100% all-electric delivery vans.