The world’s largest department store chain, Walmart (WMT), is reporting fourth-quarter financial results on Tuesday, February 19, before the regular trading hours. The market expects Walmart to post a 2.2% growth in revenue to $139.30 billion, which will likely be helped by improved digital sales.
During the last reported quarter, the top line growth was pegged at 1.4%.
Meanwhile, adjusted earnings are expected to be flat year-over-year at $1.33 per share, likely to be hurt by its investment in Indian e-commerce major Flipkart.
In May last year, Walmart had acquired a 77% stake in Flipkart for about $16 billion, pitting itself against Amazon (AMZN) in a budding e-commerce market. However, things haven’t been going as smooth in India as Walmart might have expected.
It was revealed in a recent report by Barclays that Amazon had already taken a lead over the domestic rival, within just 5 years of its entry into the Indian market. Amazon is now India’s biggest online shopping platform, with its Gross Merchandise Volume 20% higher than Flipkart.
Additionally, the country recently issued a new ruling that bars e-commerce companies from selling to firms where they have a stake. This comes as a spoiler to e-commerce majors who had been using B2B firms as intermediaries to sell products at a discounted rate.
These headwinds had earlier prompted Walmart to slash its full-year EPS guidance from $2.65-2.80 to $2.26-2.36.
Meanwhile, the Bentonville, Arkansas-based retailer’s investments and partnerships in the grocery business is expected to see results in Q4. Despite heavy competition, Walmart has been successful in maintaining a steady lead in the grocery business, compared to other rivals including Kroger (KR), Target (TGT) and Costco (COST).
Investors will also be looking at Walmart’s e-commerce sales growth, which came in at a stellar 43% in the third quarter. Online sales at Sam’s Club had jumped 32% during this period.
WMT shares have declined 4.3% in the trailing 52 weeks, compared to a 0.5% gain registered by the S&P 500 index during the same period. The stock has a 12-month price target of $108.63, which is at a 10% upside from the last close.
Last month, brokerage firm Morgan Stanley upgraded its rating on Walmart to overweight from equal weight and lifted the price target to $110 from $107, citing the stability of the stock despite the bearish earnings outlook for the retail industry.
Last reported quarter
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