Walmart Q1 Earnings Preview: Analyst Estimates, 'Everyday Low Price' Model Resonates With Households Across Income Levels

Zinger Key Points
  • Those earning less than $100,000 a year have increased shopping at Costco and Walmart by 24% and 6%, respectively.
  • Walmart is cutting corporate jobs as part of a downsizing effort. It also shuttered 51 health clinics.

Retail giant Walmart Inc WMT reports first-quarter financial results before market open Thursday, May 16, 2024.

Here are the earnings estimates from analysts, what analysts are saying and key items to watch.

Earnings Estimates: Analysts expect Walmart to report first-quarter revenue of $159.52 billion, according to data from Benzinga Pro.

The Bentonville, Arkansas-based company reported revenue of $152.3 billion in last year's first quarter. Walmart has beaten analysts' estimates in each of the last 10 quarters.

Analysts expect Walmart to report first-quarter earnings per share of 52 cents. The company reported earnings of 49 cents in last year's first quarter. Over the last 10 quarters, Walmart has beaten analysts' estimates in seven quarters, missed in two quarters and met estimates in one quarter.

Guidance from the company calls for first-quarter net sales to grow 4% to 5%, which would indicate $158.39 billion to $159.92 billion.

Related Link: Walmart Q4 Earnings – Revenue And EPS Surprise, Dividend Hike, VIZIO Buyout And More

What Analysts Are Saying: Favorable spending in the U.S. and a shift from lower-income households to where they are shopping could benefit Walmart, Stifel analyst Mark Astrachan said in a recent note.

"Spending intentions continue to improve amongst those earning less than $75,000/year, though we think they are shifting where and what they are purchasing, including increasing spend on private label and favoring larger retailers," Astrachan said.

The analyst said survey results showed consumers earning less than $100,000 a year have increased shopping intentions at Costco Wholesale Corporation COST and Walmart by 24% and 6%, respectively.

The analyst, who has a Hold rating and $65 price target on Walmart, said he prefers Costco (Buy rating) but sees "more upside than downside" for Walmart.

"Also notable, our analysis continues to show Walmart has the highest shopping intentions relative to peers, overall and across income levels."

The analyst said the survey shows even more higher income consumers shifting to Walmart.

"While Walmart still skews to the lower income consumer compared to Target and Costco which skew to the higher income consumer, we are seeing the gap narrow significantly in recent surveys. We think this suggests Walmart's everyday low price model is resonating with households across income levels."

Here are other recent analyst ratings on Walmart and their price targets:

  • Evercore ISI: Outperform rating, raised price target from $66 to $67
  • Telsey: Outperform rating, $68 price target
  • UBS: Buy rating, raised price target from $63 to $69

Key Items to Watch: Walmart's net sales and trends can point to economic health for the retail sector and U.S. consumers.

It was recently reported that Walmart is cutting corporate jobs and asking remote workers to move to corporate hubs in a move that follows other downsizing efforts at other companies.

After being open for five years, Walmart also announced the closing of 51 health clinics. The move follows other cost-cut efforts.

For an area of growth to watch, Walmart launched its private food brand Bettergoods recently. This marks the company's largest private brand food launch in 20 years and could lead to more consumers making the switch to Walmart.

Bettergoods has over 300 items available; most items are priced under $5.

An update from the company on how the rollout and initial sales went could be well received by analysts and investors.

WMT Price Action: Walmart shares trade at $59.97 versus a 52-week trading range of $48.34 to $61.66. Walmart stock is up 14% year-to-date in 2024 and up 18% over the last year.

Read Next: Affirm Stock Drops As Walmart Rolls Out New Payment Options: The Details

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