Walmart quarterly numbers quite predictably beat even the crowd's lofty expectations in both revenue and profit opening the way to new price peaks. During the first 5 minutes after the release, the market response was an immediate taking off and soaring by 6.6%, from $68.66 to $73.20 per share. The previous high for Walmart stock was detected at $71.33 on July 19, so that means entering into a new price area for the US largest chain of economy class hypermarkets. Even before the report, many investment houses formed their consensus opinion that Walmart was still in Overweight position, with their price targets well above $80. And now the whole situation not only looks better, but bullish prospects for the stock are also easier to understand.
Walmart announced its quarterly EPS of $0.67, just a $0.03 better than the analyst estimate of $0.64, yet this number set an absolute record on a 9.2% surplus YoY, of course if the whole date series for years would be retroactively adjusted for the 1:3 stock split, which has been accomplished at the end of February. Moreover, the current achievement is shown despite its revenue record still not exceeded, pointing at smart and profitable pricing policy in a challenging environment. Walmart's revenue for the last quarter came out at $169.3 billion, which can be called weaker only when compared with $173.4 billion in the Christmas quarter. We can agree this would not be an exactly valid comparison with an all-time record for the sale-off season. Besides, its YoY growth is 4.7% in sales, with the consensus estimate for Q2 being at $168.52 billion, against $161.6 billion in Q2 2023.
The further pace of the rally in Walmart could be limited by the company's moderately shying forward guidance as it sees Q3 EPS of $0.51-$0.52 vs analyst poll consensus of $0.54 and a $2.35-$2.43 range for its annual EPS for the financial year or 2025 average analyst bets on $2.43. However, this would barely derail the upside move as Walmart investors knew from their previous experience that their favourite company's management prefers to understate expectations and later beat them. Again, Walmart's own prior forecast was "at the high end of a range of $2.23 to $2.37 per share", and so an actual raising of its profit forecasts happened. Its fiscal 2025 net sales growth is foreseen in between 3.75% and 4.75% from a prior range of 3% to 4% growth. The number of transactions, which indicates store visits, rose 3.6% in U.S. stores and online orders. The average ticket, which means how much Walmart visitors are spending per one visit, is 0.6% up YoY.
Surely, rising sales of inexpensive essentials, with an already beginning deterioration in the labour market, helps discounter chains compared to the average consumer activity in other shops. Walmart accounts for $1 of every $5 spent on groceries in the United States. But Walmart's reputation as a destination for upper-income shoppers has expanded for the last several years, because of mighty merchandise upgrades and investments in curbside pickup and delivery. This is why online sales in Walmart added 22% YoY. Anyway, Walmart's report ahead of the opening bell on August 15, being a major market bellwether of the week, also sets the positive mood for nearest days, revealing some further upside potential for the rest of the consumer segment at least.
