Wal-Mart Stores, Inc. (WMT - Analyst Report) is a multinational retailer that runs large department stores and warehouse store chains. The company has more than 11,500 stores in 28 countries.
Of late, Wal-Mart is delivering positive comps at Wal-Mart U.S., after delivering negative comps since the third quarter of fiscal 2013. This was the result of lower fuel prices, which eased consumers’ spending power. However, the company still faces several headwinds. Wal-Mart’s commitment to spend around $1 billion to raise wages, medical cost inflation and rising health-care costs, and huge investments in the e-commerce business have significantly increased Wal-Mart’s expenses and will take a toll on the company’s profitability. Currency is also a major concern for Wal-Mart. Given these factors, investors were eagerly waiting for the company’s latest earnings report.
This is especially true given the recent earnings estimate revisions for WMT as the consensus estimate has been going downwards. Further, WMT has a mixed earnings history. WMT has delivered positive earnings surprise in two of the last four quarters, and in-line estimates in the remaining two quarters, making for an average positive surprise of 1.81%.
Currently, WMT has a Zacks Rank #4 (Sell), but that could definitely change following Wal-Mart’s earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:
Earnings: WMT posted earnings of $1.08 per share, missing our consensus of $1.12. Investors should note that these figures take out stock option expenses.
Revenue: WMT posted revenues of $120.23 billion. This beat our consensus estimate of $119.97 billion.
Key Stats to Note: Wal-Mart U.S. comparable store sales increased 1.5% in the second quarter, driven by 1.3% growth in traffic. Comp sales increased 1.3% at the Sam's Club, without the impact of fuel, driven by 0.5% traffic growth. However, the company has lowered its earnings guidance on the back of significant headwinds from currency, higher expenses and reduced pharmacy reimbursements rates.
Stock Price: In-active in pre-market trading.
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