Walmart (WMT) Gains After Crushing Estimates, Analysts Bulled Up on 'Strong Q1 Results'

May 18, 2021 9:50 AM EDT
Get Alerts WMT Hot Sheet
Price: $135.17 -1.85%

Rating Summary:
    31 Buy, 16 Hold, 5 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 15 | Down: 13 | New: 24
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Shares of Walmart (NYSE: WMT) are up more than 3% in today's trading session after the retail giant reported stronger-than-expected Q1 earnings.

WMT reported a profit of $1.69 per share to crush the $1.21 expected from the market analysts. Business sales on the other hand came in at $138.31 billion to again easily exceed the $131.97 billion expected.

“This was a strong quarter. Every segment performed well, and we’re encouraged by traffic and grocery market share trends. Our optimism is higher than it was at the beginning of the year. In the U.S., customers clearly want to get out and shop. We have a strong position as our store environment improves and eCommerce continues to grow. Stimulus in the U.S. had an impact, and the second half has more uncertainty than a typical year. We anticipate continued pent-up demand throughout 2021. Our results reflect the continued hard work and commitment our associates have shown throughout the pandemic — serving others and helping provide vaccines — and we’re grateful to them,” said Doug McMillon, President and CEO, Walmart.

WMT says that same-store sales rose by 6% to smash the Street’s consensus of 0.9%. Although transitions declined by 3.2%, the average ticket growth soared by 9.5%. Internationally, net sales came in at $27.3 billion to mark a 8.3% drop year-over-year as the company exited some part of its global business. However, e-commerce sales soared by 49%.

For the guidance, the company updated its previous forecast to now expect to grow comparable net sales in the low single digits. Operating income is now expected to raise mid-single-digits in constant currency, while Q2 US comparable growth is expected to be in the low single digits, ex. fuel.

Stifel analyst Mark Astrachan maintained its “Hold” rating and a $150.00 per share price target on WMT.

“Walmart is the world’s largest company by revenue, serving nearly 265mm customers per week through over 11,200 stores in 27 countries and e-commerce websites. We believe recent comp growth results indicate Walmart’s investment in price and associates is working, resulting in improved traffic trends and store productivity. We maintain our Hold rating, though we believe Walmart’s continued comp growth and strong e-commerce results better position it to compete against online competitors compared to retailer peers,” the analyst wrote in a note.

BofA analyst Robert Ohmes is more bullish than his colleague at Stifel as he has a “Buy” rating and $180.00 per share price target on the stock. He comments:

“We see WMT very well-positioned as it executes on an omni-channel strategy leveraging its dominant store footprint/broad category assortment to support localized fulfillment advantages. We believe rising visibility on alternative profit streams (incl. Digital advertising through recently rebranded “Walmart Connect” Media business) as WMT flows its unmatched customer base thru digital will support valuation, while Discount Store Decade tailwinds & strong execution in stores & online should help impressive WMT US momentum continue.”

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