Join        Login             Stock Quote

Wal-Mart Stores, Inc. Q4 Earnings Preview: What To Watch

 February 20, 2013 10:00 AM

(By Mani) Wal-Mart Stores, Inc. (NYSE: WMT) is expected to report higher earnings on better expense management when it reports fourth-quarter financial results on Feb.21.

Results of Wal-Mart, a Dow component, could give an idea about the performance of the retail industry as it operates more than 10,000 retail units in 27 countries.

Retailers such as Wal-Mart are operating in weak macroeconomic conditions that are curtailing customer spending. Moreover, it faces strong competition from other discount, department, drug, dollar, variety and specialty stores, warehouse clubs and supermarkets.

[Related -Target Corporation (TGT) Dividend Stock Analysis]

Wall Street expects earnings of Bentonville, Arkansas-based retail giant at $1.57 a share, according to analysts polled by Thomson Reuters. The consensus view implies an increase of 9 percent from last year, when it earned $1.44 a share. The company sees fourth quarter fiscal 2013 earnings per share from continuing operations of $1.53 to $1.58.

Wal-Mart's earnings have managed to top analysts' estimates thrice in the past four quarters. However, the beat margin for the past two quarters stand at 0.9 percent, or 1 cent. This indicates that the company's earnings may meet or beat Wall Street view.

Quarterly sales are expected to increase 4.6 percent to $128.85 billion from $123.17 billion in the same quarter last year.

Generally, retailers generate more than 30 percent of their annual sales from the final three months of the year due to the holiday season and has certain key events such as Thanksgiving Day, Black Friday and Christmas.

[Related -Costco Wholesale Corporation (NASDAQ:COST) Q1 Earnings Preview: Membership Fees Or Bust]

Investors will be looking at how Wal-Mart fared in the holiday season by looking at quarterly comparable store sales, a key retail metric, and comments over foot traffic. U.S. comps are estimated in the range of 1.5 to 2.5 percent. Of late, the international division is making up for the weak performance in the U..S division.

The company projects comparable store sales growth for the quarter at Walmart U.S. of 1 to 3 percent and at Sam's Club, without fuel, of 1.5 to 3.5 percent.

Since Wal-Mart sells goods at lower prices, investors and analysts are expected to watch the margin numbers – both gross and operating. Gross margin indicates the profit on sales while operating margin shows whether the company has managed to have a lid on costs in this tough operating environment.

Inventory is another key metric for retailers. If past inventory are not disposed, then it is a sign of worry for the company as it indicates that sales have not met expectations.

Last but not the least, outlook comments for the full year would be watched closely as the consumer spending may hurt due to an uptick in gasoline prices, the ending of the payroll tax benefit, and higher taxes and healthcare costs. Recent media reports say that the retailer had the worst sales start to any month in seven years in February, suggesting that the outlook would be on the lower side.

For the third quarter, Wal-Mart's profit grew 9 percent and beat Street, but revenue came in short of estimates. The company earned $3.64 billion or $1.08 per share for the third quarter, higher than $3.34 billion or 96 cents per share in the year-ago quarter.

Walmart's revenues for the quarter increased 3.4 percent to $113.93 billion. Total comparable store sales grew 1.7 percent. Constant currency sales grew 4.9 percent to $114.9 billion.

For the full-year 2012, analysts are expecting earnings of $4.92 per share on revenue of $470.08 billion.

Shares of Wal-Mart, which has a market cap of $230 billion, has been trading between $57.18 and $77.60 during the past 52-weeks. They trade 14 times its 2013 consensus earnings estimate.

Out of the 26 analysts covering the stock, 11 of them rate the stock as a "buy" or "strong buy," while 14 analysts recommend "hold." One analyst has a "sell" rating on the stock.



Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageBogle Says Indexing Destined To Win The Battle Of The Quants

Vanguard founder John Bogle gave a powerful speech last month at the Q Group’s Spring Seminar that lays out read on...

article imageVMAX and VMIN Poised to Be Most Important VIX ETP Launch in Years

REX Shares is launching two new VIX exchange-traded products on Tuesday in what is likely to be the most read on...

article imageThe April 29 Gold Triangle Breakout Update

If you’re just watching stocks, you may be missing this powerful Triangle Breakout surge in read on...

article imageSell In May, But It Is A Presidential Election Year

With May just around the corner, articles covering the "Sell in May' phenomenon are not in short supply and read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.