Here’s what Wall Street experts are saying about Walmart ahead of earnings

Walmart to report Q4 earnings before the market opens Tuesday

Walmart (WMT) is scheduled to report results of its fourth quarter before the market open on Tuesday, February 21, with a conference call scheduled for 8:00 am EDT. What to watch for:

GUIDANCE: In November, Walmart forecast Q4 adjusted earnings per share down 3%-5%, with revenue up 3%, against analysts’ consensus estimates at the time calling for EPS of $1.46 and revenue of $158.76B. Walmart forecast U.S. comparable sales of 3%, and said revenue for the quarter would be negatively impacted by approximately $1.3B from currency fluctuations. The company also again raised its FY23 adjusted EPS view to down 5%-6% excluding divestitures and its FY23 consolidated net sales growth view to about 5.5%, or about 6.5%, excluding divestitures. Walmart previously forecast adjusted EPS for the year to be down 9%-11% and revenue to be up 4.5%. Analysts currently expected Walmart to report EPS of $6.08 on revenue of $606.71B. Walmart U.S. comp sales growth, excluding fuel, is expected to be up about 5.5%.

Cowen sees prospects of better sales trends and the likelihood of solid store traffic trends, particularly in January.

OPIOID SETTLEMENT FRAMEWORK: In conjunction with its last earnings report, Walmart announced it agreed to a $3.1B nationwide opioid settlement framework designed to resolve substantially all opioid lawsuits and potential lawsuits by state, local, and tribal governments, if all conditions are satisfied. Walmart believes the settlement framework is in the best interest of all parties and will provide significant aid to communities across the country in the fight against the opioid crisis, with aid reaching state and local governments faster than any other nationwide opioid settlement to date, subject to satisfying all settlement requirements. The company said, "Walmart strongly disputes the allegations in these matters, and this settlement framework does not include any admission of liability. Walmart will continue to vigorously defend the company against any lawsuit not resolved through this settlement framework."

TACTICAL OUTPERFORM: Evercore ISI added Walmart to the firm’s "Tactical Outperform" list ahead of earnings on Tuesday, noting that the stock has lagged the S&P and S&P Retail Index by 5% and 17%, respectively, year-to-date. The firm sees upside to Q4 results driven by stronger sales and share gains in grocery and thinks a 2023 guide down is likely already reflected in the stock performance.

‘RESET’ BUT ‘NOT A RECESSION YET’: Barclays said the U.S. Broadlines, Hardlines, & Food Retail space balances a positive structural view of this group post-pandemic along with a relatively stable consumer backdrop against pockets of cyclical risk and strong year-to-date stock moves. Supply/demand dynamics have supported record margins normalizing, adding that it has greater preference for stocks with "defensive characteristics." Barclays said Walmart tops its list in terms of preference as it also has numerous incremental growth drivers as its initiatives around assortment, service, and convenience that positioned the company to gain share in stores and online.

Meanwhile, Gordon Haskett expects Walmart to see benefits from continued sales tailwinds and improving margin flow through as peak cost pressures ease. The company has a "host of high-margin ancillary initiatives that provide added financial flexibility," the firm said.

CLOSING TECH HUBS: Walmart plans to close its tech hubs in Austin, Texas; Portland, Oregon; and Carlsbad, California, and is requiring staff to move and be in the office twice a week to stay employed, The Wall Street Journal reported. According to a memo to staff from Suresh Kumar, Walmart’s global chief technology officer, Walmart will pay for workers in those locations to transfer to other primary offices, and a spokeswoman says the company hopes to relocate most of the workers, and some will be allowed to become full-time remote workers. "We’ve made the decision to focus our tech team’s presence within select locations," said the spokeswoman.

Keywords: earnings, quarterly earnings, earnings report, guidance, tech hubs, Q4