What to look for when Walmart (WMT) reports Q4 earnings?
Walmart Inc. (NYSE: WMT) is slated to release its fourth-quarter 2020 earnings results on Tuesday, February 18, before the market opens. The results will be benefited from the seamless connection between its stores and e-commerce business with a favorable economic environment contributing positively.
The company has been busy in investments for remodeling and technology of its stores as well as an e-commerce business in order to give a stiff fight with Amazon (NASDAQ: AMZN). Walmart has started improving search enhancing its website and executing better fundamentals that include product reviews, inventory mirroring and on-time delivery.
The top-line growth will be driven by the domestic market, traffic arising from holiday sales, and expansion of e-commerce initiatives. Across international, the company has shown an acceleration in omnichannel capabilities backed by its partnership with JD.com, with Tencent, and the investments made in the Last Mile delivery.
Walmart expects the pace of evolving change to accelerate in the next five years as new technologies like autonomous, artificial intelligence, analytics and more are possible breakthroughs for future growth prospects. In mid-December 2019, the company and Nuro were testing an autonomous vehicle grocery delivery program for selective customers in Houston.
For achieving efficient growth, the company should focus on the most productive growth opportunities, increasing comparable store and club sales, accelerating eCommerce sales growth and expansion of omnichannel initiatives while slowing the rate of growth of new stores and clubs.
Read: Bed Bath & Beyond stock dives in gloomy growth prospect
Analysts expect the company’s earnings to rise by 2.10% to $1.44 per share and revenue will increase by 2.70% to $142.52 billion for the fourth quarter. The company has surprised investors by beating analysts’ expectations in all of the past four quarters. The majority of the analysts recommended a “hold” rating with an average price target of $129.63.
For the third quarter, Walmart posted a 92% jump in earnings driven by the steady momentum in the domestic market and e-commerce initiatives. For fiscal 2020, the management expects adjusted earnings per share to increase slightly, compared to last year, including Flipkart. Excluding Flipkart, full-year earnings are seen growing by a high single-digit percentage range.
Shares of Walmart ended Friday’s regular session up 0.38% at $117.89. The stock has been trading between $95 and $125.38 in the 52 weeks.
Stock Analysts: Why is it time to keep a tab on Nordstrom (JWN) stock?
Nordstrom Inc. (NYSE: JWN) is one department store chain that managed to stay resilient to the retail upheaval that continues to pose a threat to traditional players. The continuing efforts to innovate and adapt to the changes have given the company an edge over most of its peers. It is expected to reflect in the performance of the retailer’s stock in the near term.
Nordstrom has maintained a stable inventory position. That, combined with the efforts to promote the off-price segment, should help the company revive sales growth this year. Meanwhile, profitability is seen improving supported by the management’s aggressive cost-cutting measures. Considering the brightening future prospects, it is wise to consider the stock for long-term investment.
Innovation
When it comes to sustaining the momentum, a lot will depend on the company’s ability to take forward its omnichannel initiatives. In that respect, shareholders can pin hope on the digital push and efforts to provide customers a better experience through store openings and convenient fulfillment options.
An improvement in the stock’s value is in the offing as the company is in a position to use its cash flow for returning capital to shareholders. Having spent heavily on growth initiatives in the past, Nordstrom is expected to reduce capital spending this year.
Recovery
Nordstrom’s shares have been gaining steadily after hitting a ten-year low in mid-2019. The stock is prone to post-earnings fluctuations. When the fourth-quarter numbers are published early next month, the stock movement would be more towards the downside if the sales slowdown persisted.
Meanwhile, the weak estimates call for patience as far as investing in Nordstrom is concerned. Experts recommend holding the stock for the time being as the majority of them expect it to remain flat in the run-up to the release.
Mixed Results
In what could be a reflection of the changing consumer behavior, the core full-price segment witnessed a modest slowdown last quarter, dragging the top-line by 2%. Nevertheless, earnings more than doubled to 81 cents and topped expectations. Raising concerns, the management warned of a decline in full-year sales and predicted flat earnings growth.
Also read: Nordstrom Q2 2019 Earnings Call Transcript
The stock is currently trading slightly above the levels seen at the beginning of the year. It has declined by about 10% in the past twelve months.
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