Walmart Shares Hold Steady as Analysts Provide Updated Recommendations

Walmart shares demonstrated resilience in April, falling only 1.4% compared to the S&P 500's 3.8% decline. Analysts expect Walmart to report earnings per share of $0.52 on revenues of $159.2 billion for the current quarter.

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Aqsa Younas Rana
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Walmart Shares Hold Steady as Analysts Provide Updated Recommendations

Walmart Shares Hold Steady as Analysts Provide Updated Recommendations

Walmart shares demonstrated resilience in the face of last month's market weakness, cementing the retailer's position as a defensive anchor relative to competitors like Target and Home Depot. While the S&P 500 index lost 3.8% from its March 28th peak through the end of April 2024, Walmart shares were down only 1.4% during the same period.

Why this matters: The performance of retail giants like Walmart has significant implications for the broader economy, as they can serve as indicators of consumer spending habits and overall market sentiment. As Walmart navigates the challenges posed by the current economic environment, its success or struggles can have a ripple effect on the entireretail industry.

Analysts expect Walmart to report earnings per share of $0.52 on revenues of $159.2 billion for the current quarter, representing year-over-year changes of 6.1% and 4.5%, respectively. The company's defensive attributes reflect its heavy exposure to the grocery sector and its reputation for offering value to consumers.

While Walmart has been gaining share among higher-income grocery shoppers, it still maintains substantial exposure to lower-income consumers who appear to be under increasing financial stress. In contrast, Target and Home Depot have seen their shares decline more significantly, with Target losing 9.2% and Home Depot shedding 12.9% of its value during the same period as Walmart.

As the first quarter earnings season progresses, results from 21 of the 34 retailers in the S&P 500 index have been reported. These companies have seen total Q1 earnings rise 54.5% from the same period last year on 7.4% higher revenues. Among them, 66.7% have beaten EPS estimates, and 57.1% have exceededrevenue expectations.

Looking at the broader market, the bulk of the Q1 earnings season is now behind us, with results from 460 S&P 500 companies already reported through Friday, May 10th. Total Q1 earnings for these 460 index members are up 4.8% from the same period last year on 4.2% higher revenues. Notably, 77.4% have beaten EPS estimates, and 60% have surpassedrevenue projections.

Interestingly, earnings growth for these companies would have been 7.9% instead of 4.8% had it not been for the substantial drag from the Energy sector. This highlights the divergent performance across various industries and the impact that sector-specific challenges can have on the overallearnings picture.

As Walmart prepares to report its quarterly results, analysts have been providing updated recommendations on the stock. Several firms, including Oppenheimer, UBS Group, Telsey Advisory Group, and Tigress Financial, have either lifted their price targets or reiterated their positive ratings on Walmart shares. According to MarketBeat.com, the stock currently has a consensus rating of "Moderate Buy" and a consensus target price of $61.94.

In its previous quarterly report, Walmart delivered earnings per share of $0.60, beating the consensus estimate of $0.55 by $0.05. The company generated revenue of $173.40 billion during the quarter, compared to analyst estimates of $170.85 billion. Walmart also declared a quarterly dividend of $0.2075 per share, which will be paid on Monday, January 6th.

As investors await Walmart's upcoming earnings release, the company's resilient performance in the face of market volatility and its defensive characteristics have positioned it favorably compared to itsretail peers. With a growing share of higher-income grocery spending and a reputation for offering value, Walmart appears well-equipped to navigate the challenges posed by the current economic environment. However, the retailer's exposure to lower-income consumers remains a point of concern as financial pressures mount for this demographic.