Walmart Inc. (WMT - Free Report) is likely to witness a year-over-year decline in the top line when it reports fourth-quarter fiscal 2022 earnings on Feb 17 before the market open. The Zacks Consensus Estimate for revenues is pegged at $151.1 billion, suggesting a drop of 0.6% from the prior-year quarter’s reported figure.
However, the bottom line is likely to register a year-over-year increase. The Zacks Consensus Estimate for earnings has remained unchanged over the past 30 days at $1.49 per share, which indicates 7.2% growth from the figure reported in the prior-year period. The supermarket giant has a trailing four-quarter earnings surprise of 12.3%, on average. Walmart delivered an earnings surprise of 4.3% in the last reported quarter.
Walmart Inc. Price, Consensus and EPS Surprise
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Walmart Inc. price-consensus-eps-surprise-chart | Walmart Inc. Quote
Key Factors to Note
Walmart has been gaining from its sturdy comp sales record, which is driven by its constant expansion efforts and splendid e-commerce performance. WMT has been undertaking several efforts to enhance merchandise assortments. Also, the company has been focused on store remodeling to upgrade them with advanced in-store and digital innovations. Walmart is also gaining from its compelling pricing strategy, which helps it draw customers. Management envisions fourth-quarter U.S. comp sales, excluding fuel, of around 5%.
The company’s e-commerce business and omnichannel penetration have been growing more amid the pandemic. Walmart has been taking several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems. The company is innovating the supply chain and adding capacity as well as building businesses, such as Walmart GoLocal, Walmart Connect, Walmart Luminate, Walmart+, Spark Delivery, Marketplace, and Walmart Fulfillment Services. During the third quarter of fiscal 2022, the company launched a new demand-side platform in partnership with The Trade Desk to expand off-site media offerings. The company is witnessing rapid growth in advertising income worldwide led by the United States, Flipkart, and Mexico. These aspects bode well for the quarter under review.
Additionally, Walmart has taken robust strides to strengthen its delivery arm as evident from its expansion of InHome delivery service, investment in DroneUp, a pilot with HomeValet, the introduction of Carrier Pickup by FedEx, the launch of Walmart+ membership program, drone delivery pilots in the United States with Flytrex and Zipline and a pilot with Cruise to test grocery delivery through self-driven all-electric cars. Walmart’s Express Delivery service has also been working well for the company.
That said, the divestiture of Walmart’s businesses in Argentina, the United Kingdom, and Japan has been affecting sales. WMT’s overall revenues in the third quarter of fiscal 2022 were hurt by about $9.4 billion by divestitures concerning the Walmart International business. This remains a concern for the quarter to be reported. Apart from this, the supply chain, inflation, and labor are likely to keep margins under pressure. On its last earnings call, management highlighted that the long period of sustained demand for goods has stretched supply chains, resulting in out-of-stocks and inflation.
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