The increase in the Q1 sales recently reported by Walmart surpassed expectations. Aside from that, the retailer also raised its annual forecasts for earnings per share to a range of $6.10 to $6.20 against previous earnings expectations of $5.95 to $6.05 per share for the fiscal year.
According to Walmart’s Chief Executive Officer Doug McMillon, the company keeps expanding its market share in the grocery category, including those with higher income and younger customers. Both of these segments demonstrate solid revenue growth.
In the first quarter, net sales YoY rose 7.6% to $152.3 billion compared to the $148.7 billion forecast. Diluted earnings per share totaled $1.47, exceeding the estimates of $1.31.
The forecast turned out to be less favorable—earnings per share in Q2 are expected to be in the range of $1.63 to $1.68 compared to the projected $1.70. This is due to the fact that, according to Walmart, food inflation went into double digits.
In the meantime, annual earnings per share are in the range of $6.10 to $6.20 as compared to the forecast of $6.14 and from the 5.90 to 6.05 range previously.
It stands to mention that Walmart stocks climbed 5.5% since the beginning of the year against the 7% growth of the S&P 500.
Jefferies analysts have a ‘buy’ rating on these stocks claiming that Walmart remains one of their top recommended options. The company is building its share and operating profit, whereas initiatives such as automation, advertising, Walmart+, and other solutions help create a powerful flywheel effect. In this context, we can see an overall positive outlook for Walmart’a growth prospects and yield.
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