Stock Market News – Walmart releases quarterly earnings as it attempts to challenge Amazon’s e-dominance


Andreas Georgiou, XM Investment Research Desk

Walmart’s earnings report for its fiscal second quarter will be hitting the markets before Thursday’s US market open. The consensus recommendation for the company is “buy”, which matches the average consensus recommendation for the Food Retail & Distribution peer group.

The retail giant’s earnings per share (EPS) for the quarter ending in July are anticipated to stand at $1.22, according to Thomson Reuters consensus estimates; a figure which has remained unchanged over the past four weeks. If the firm’s bottom line matches forecasts, this would constitute an improvement of around 13% compared to the same quarter last year when the corporation made $1.08 per share. In addition, EPS estimates range from $1.11 to $1.26, while Walmart delivered an earnings beat in three of the four previously reported quarters and a miss once.

In terms of the top line, FactSet estimates are projecting the company’s revenues to come in at $126.02 billion, up from $123.36bn in Q2 2017; the following chart provides a sales breakdown (Sam’s club is an American chain of membership-only retail warehouse clubs owned and operated by Walmart). Also to be closely watched out of Thursday’s release are e-commerce growth & investments, as the retailer is attempting to challenge Amazon’s dominance in the online space. Meanwhile, management guidance has the potential to spur movements in the firm’s stock as well.

Turning to market positioning, an overall upbeat release by the grocery stores chain is likely to generate buying interest for its shares. Given a conclusive break above the $90 handle, resistance to advances may occur around the 38.2% Fibonacci retracement level of the January 29 to May 24 downleg at $92.55, before the 50% Fibonacci mark comes into view at $95.88. Conversely, a disappointing report is expected to exert downside pressure on the stock, with support to declines possibly coming around the 23.6% Fibonacci point at $88.42. Steeper losses would bring into scope the current levels of the 50- and 100-day moving average lines at $86.56 and $86.15 correspondingly.

Walmart’s stock is trading lower by 9.2% year-to-date, which negatively compares to the S&P 500’s equivalent performance of +5.5%. In the meantime, the Dow Jones is up by 1.9% in the year-to-date; Walmart is one of the thirty blue-chips that constitute the benchmark. Despite its underperformance so far in 2018, Walmart’s recovery after touching a 10-month low of $81.78 on May 24 is also of note; the shares have appreciated by 9.6% after hitting that nadir.

Wall Street analysts’ mean price target on Walmart’s stock is at $94.44.