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What to Anticipate From Walmart’s Earnings Announcement Before the Bell

Walmart is set to unveil its fiscal second-quarter earnings, aiming to capitalize on consumer demand for affordability. According to consensus estimates from Refinitiv, analysts predict earnings of $1.71 per share and revenue totaling $160.27 billion for the three-month period. The retail giant is garnering optimism from investors due to its resilience in the face of changing consumer preferences and economic fluctuations, unlike competitors such as Target and Macy’s. As the largest grocery retailer in the nation, Walmart focuses on essential items like milk, eggs, and bread, which remain consistently purchased even during tighter budget periods.

Unlike Target, Walmart relies less on discretionary purchases, a contrast that recently led to Target missing revenue projections and revising its guidance downward. Walmart’s success is driven by diversifying revenue sources, including expansion in advertising endeavors and increased adoption of its membership program, Walmart+. These high-margin segments have prompted CEO Doug McMillon to project faster profit growth than sales over the next five years.

Nonetheless, Walmart has observed reduced spending on non-essential items like clothing. McMillon noted the impact of persistent inflation during a previous earnings call, acknowledging that it poses a significant source of uncertainty in the latter half of the year.

In May, Walmart raised its full-year guidance following an earnings beat. The company anticipates a 3.5% increase in consolidated net sales for the fiscal year, while adjusted earnings per share are projected to fall between $6.10 to $6.20.

Despite a 12% year-to-date increase in Walmart’s stock value, which lags slightly behind the S&P 500’s nearly 15% rise, the company’s shares closed at $159.26 on Wednesday, contributing to a total market valuation of $428.9 billion.