Walmart Delivers Strong Q1 E-commerce Sales, Raises Q2 Outlook

U.S. retail powerhouse Walmart (WMT) recorded a remarkable improvement in its e-commerce sales in the first quarter of Fiscal 2022 which drove overall revenue growth and led management to boost both the Q2 and full-year outlook.

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Walmart reported Q1 revenue of $138.3 billion, representing 2.7% year-over-year growth. The company said that revenue was reduced by $4.2 billion due to recently divested international businesses. Still, the retailer gained market share in the grocery category. EPS came in at $0.97 or $1.69 on an adjusted basis.

The U.S. e-commerce business was a bright spot in the quarter, recording a 37% increase in sales. The retailer reported that e-commerce sales have more than doubled in the past two years. At Walmart’s Sam’s Club, its membership-only retail warehouse club, e-commerce sales increased 47%.

“This was a strong quarter. Every segment performed well, and we’re encouraged by traffic and grocery market share trends. Our optimism is higher than it was at the beginning of the year,” commented Walmart President and CEO Doug McMillon.

For Q2, Walmart expects its U.S. comparable-store sales to rise in the low single-digit range. It predicts EPS to increase in the high single-digits. The previous guidance called for a slight decline. (See Walmart stock analysis on TipRanks)

Guggenheim analyst Robert Drbul reiterated a Buy rating and raised the price target on Walmart stock to $170 from $160. This implies almost 20% upside potential over the next 12 months.

“We believe Walmart is making the necessary investments for continued long-term success and expect the company to continue to gain market share,” noted Drbul.

Consensus among analysts on Wall Street is a Strong Buy based on 9 Buy and 3 Hold ratings. The average analyst price target of $163.56 implies 15.3% upside potential to current levels.