Walmart Analysts Break Down Q3 Earnings: ‘Well-Positioned to Gain Market Share’

By Benzinga
November 19, 2021 Updated: November 19, 2021

Walmart Inc. reported better-than-expected earnings on Tuesday and said it’s well-positioned for the holiday shopping season despite supply chain disruptions.

Walmart reported third-quarter adjusted earnings per share (EPS) of $1.45 on revenue of $140.53 billion. Both numbers topped consensus analyst estimates of $1.40 and $135.6 billion. Revenue was up 4 percent from a year ago.

U.S. same-store sales (excluding fuel) were up 9.2 percent, beating analyst estimates of 6.9 percent. U.S. online sales were up 8 percent from a year ago and 87 percent compared to 2019. Sam’s Club same-store sales (excluding fuel) were up 13.9 percent, higher than the 8.7 percent growth analysts were expecting.

Looking ahead, Walmart raised its full-year EPS forecast from between $6.20 and $6.35 to a new target of $6.40. The company also said inventory levels are up 11.5 percent ahead of the holiday shopping season.

Gaining Market Share

Telsey Advisory Group analyst Joseph Feldman said Walmart is “well-positioned to gain market share” thanks to its discount product mix and its integrated omni-channel operation.

“The company is proving successful in operating an efficient, fully integrated omni-channel retail model—given its intense focus on the customer, ability to leverage talent, technology, vendor relationships, and strong financial flexibility—while developing a broader ecosystem, including membership, fulfillment services, digital payment, and advertising,” Feldman wrote.

Raymond James analyst Bobby Griffin said Walmart is positioned to be a long-term winner in the modern retail landscape.

“In addition, we believe Walmart Connect has the potential to be a strong sales and margin contributor (materially higher than WMT’s other core businesses once scaled) over the coming years—yielding faster and more consistent EPS growth,” Griffin wrote.

Growth Initiatives on Track

Bank of America analyst Robert Ohmes said Walmart’s core business remains strong, and its growth initiatives are on track.

“We view [a] stock pullback as a particularly attractive buying opp,” Ohmes wrote.

KeyBanc analyst Edward Yruma said conditions appear favorable for Walmart in the fourth quarter, but a shift back to travel and experience spending in 2022 may create headwinds.

“Walmart is navigating inflation well, and is in a strong inventory position heading into the holiday season,” Yruma wrote.

Ratings and Price Targets

  • Telsey Advisory Group has an Outperform rating and $175 target.
  • Bank of America has a Buy rating and $190 target.
  • Raymond James has an Outperform rating and $170 target.
  • KeyBanc has an Overweight rating and $180 target.

By Wayne Duggan

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