WMT Stock Desperate for an Earnings Beat

by Alyssa Oursler | November 11, 2013 9:05 am

WMT Stock Desperate for an Earnings Beat

Big-box behemoth Walmart (WMT[1]) will report third-quarter earnings next Thursday, and WMT stock investors are understandably praying for a Walmart earnings beat.

walmart WMT Stock Desperate for an Earnings BeatThose betting on WMT stock probably don’t expect eye-popping growth from the world’s largest retailer … but they probably expect more than what they’ll end up getting. Walmart earnings have fallen short of analyst expectations in the two most recent quarters, while WMT stock is lagging the market significantly over the last 12 months.

The S&P 500 has enjoyed 28% gains during the past 52 weeks, while WMT stock has climbed around a quarter of that amount.

With WMT stock in need of a boost and the all-important holiday season right around the corner, the Q3 Walmart earnings report is definitely one to watch.

What to Expect from Walmart Earnings

WMT stock analysts have trimmed their expectations heading into the third-quarter Walmart earnings report. Walmart earnings of $1.17 per share were expected around three months ago, but that number has since fallen to $1.13 per share. Translation: growth of less than 5%.

Meanwhile, revenue is only expected to expand by 2.5%.

That low bar could be a blessing in disguise for WMT stock. That’s because, once again, Walmart earnings fell short during the first two quarters of the year — and WMT stock took a tumble each time as a result. Then again, the bar is being lowered for a reason: The giant retailer is struggling to keep growing.

Another thing to keep an eye on in the Walmart earnings report will be the company’s fourth-quarter outlook. Walmart execs have said the company is planning its “biggest Black Friday ever,” and the company started seven of its Black Friday deals on Nov. 1[2].

Plus, at a recent annual investment meeting, WMT management added that it will be “shouting the holiday message”[3] via 25 billion ad impressions over TV, print, radio, search and social media.

Unfortunately for WMT stock investors, those nice sound bites aren’t expected to boost the bottom line. Expectations for Q4 and full-year Walmart earnings have also been slipping, with current expectations translating to growth of just more than 1% and 3%, respectively.

WMT stock investors could be turned off by a mediocre outlook considering all the positive and exciting press Walmart has pushed about Black Friday and the coming holiday season.

And a mediocre outlook coupled with mediocre earnings could make WMT stock investors realize that their money is better spent elsewhere.

All in all, there are legitimate reasons to worry about WMT stock heading into next week’s report.

More on WMT Stock

As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.

Endnotes:
  1. WMT: http://studio-5.financialcontent.com/investplace/quote?Symbol=WMT
  2. started seven of its Black Friday deals on Nov. 1: http://investorplace.com/2013/11/wmt-stock-wmt-holiday-deals/
  3. “shouting the holiday message”: http://investorplace.com/2013/10/walmart-shoppers-wmt/
  4. Why WMT stock is dead money : http://slant.investorplace.com/2013/10/wmt-walmart-stock/
  5. 5 things Walmart shoppers will be seeing more of: http://investorplace.com/2013/10/walmart-shoppers-wmt/
  6. Portfolio Grader isn’t impressed by WMT stock: http://investorplace.com/2013/11/wmt-wal-mart-needs-price-check
  7. Dollar stores pick up where Walmart lags: http://investorplace.com/2013/10/dollar-stores-walmart-wmt-dltr-dg-fdo

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