Walmart Exceeds Q2 Expectations, Lifts Guidance

Multinational omnichannel retailer Walmart, Inc. (WMT) reported better-than-expected second-quarter results and lifted its full-year 2021 guidance. Shares jumped as much as 1.2% in intra-day trading following the news and closed the day flat at $150.70 on August 17.

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The company reported adjusted earnings of $1.78 per share, up 14% year-over-year, and significantly surpassed the Street’s estimate of $1.56 per share.

Additionally, total revenue climbed 2.4% to $141.05 billion, outpacing analysts’ estimates of $136.74 billion.

Compared to the year-ago period, Walmart’s U.S. comparable sales (excluding fuel) grew 5.2%, with net sales growing 5.3% to $98.2 billion. The growth was attributed to strong underlying business trends, economic recovery, and stimulus spending.

However, Walmart International’s net sales declined 15.2% year-over-year to $23 billion, primarily as a result of divestitures.

To add to that, both Sam’s Club net sales and comparable sales increased 13.9% compared to the year-ago period, aided by stimulus spending and backed by broad strength across all categories, and especially from food. (See Walmart stock charts on TipRanks)

Commenting on Walmart’s strong quarterly results, Doug McMillon, the company’s President and CEO said, “Our global eCommerce sales are on track to reach $75 billion by the end of the year, further strengthening our position as a leader in omnichannel. We grew market share in U.S. grocery, added thousands of new sellers to our marketplace, rapidly grew advertising businesses around the world, and we’re finding innovative ways to commercialize our data and build technology.”

During the quarter, Walmart paid $1.5 billion in dividends and repurchased $2.4 billion worth of its common shares.

Based on continued momentum witnessed in its business and the absence of any further government stimulus packages, Walmart raised its guidance for full-year 2021.

For the third quarter, the company forecasts adjusted earnings to fall in the range of $1.30 – $1.40 per share compared to the consensus estimate of $1.31 per share.

For the full year 2021, Walmart projects adjusted earnings to be in the range of $6.20 – $6.35 per share, while the consensus is pegged at $6.02 per share.

In response to the solid quarterly performance, Robert W. Baird analyst Peter Benedict reiterated a Buy rating on the stock while lifting the price target to $170 (12.8% upside potential) from $160.

Benedict is impressed with the company’s upbeat results and updated guidance and believes that Walmart’s omnichannel strategy is working, with a higher number of customers returning to stores for shopping.

Moreover, the analyst also notes that Walmart reported strong comparable sales numbers and a 50 bps expansion in EBIT margins, which is a good sign.

Overall, the stock commands a Strong Buy consensus rating based on 18 Buys and 3 Holds. The average Walmart price target of $169.15 implies 12.2% upside potential to current levels. Shares have gained 11.9% over the past year.

Also, TipRanks data shows that financial blogger opinions are 90% Bullish on WMT, compared to a sector average of 72%.