Earnings Preview: Wal-Mart
Wal-Mart (NYSE: WMT) is set to report its quarterly earnings results on Thursday prior to the opening bell. This will be a very important quarter for the company, as the stock has risen sharply over the last three months. The company's results will need to justify the activity in the stock price. Wal-Mart's performance is also an interesting, although hardly exact, barometer of the economy.
On one hand, strong sales at Wal-Mart indicates that consumer spending has not completely fallen off a cliff. This needs to be juxtaposed against the fact that rising sales trends at the company can frequently be attributed, in part, to consumers trending down from higher-end stores.
Therefore, if Wal-Mart is doing great, it may be an indication that while a full-blown recession has not hit the economy, things remain very tight on the consumer front. It is likely that one of the reasons investors have been pushing up the stock in recent months is because this is their view of the current state of the economy.
Heading into the earnings report, Wall Street analysts have consensus earnings per share estimates of $1.17 compared to the $1.09 the company reported in last year's corresponding quarter. The high EPS estimate is $1.20 with a low estimate of $1.14. Revenues are expected to be $115.56 billion versus $109.37 billion last year. The high revenue estimate was $118.96 billion. The low estimate is $112.79 billion.
Over the last 3 months, consensus EPS estimates have risen by 1 penny from $1.16 to $1.17. During this time, the stock has risen almost 24 percent, and the stock is currently sitting near all-time highs above $73.00.
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