Walmart's earnings tomorrow - Why so important...

Walmart, a large multinational corporation which operates a chain of hypermarkets and discount stores is set to announce its earnings tomorrow.

These earnings should not be seen in isolation not only because Walmart is a massive company but also because it will give a glimpse into the all-important holiday season.

Walmart’s report comes in the wake of a downbeat report issued by the US Census Bureau for the month of December which said that retail sales slumped at 1.2% at the end of 2018, making it the biggest decline in nine years.

This report suggests that many consumers are shifting to online shopping for their groceries and daily needs and Walmart’s earnings will show if the firms’ newer efforts in e-commerce and international markets are giving results.

On May last year, Walmart acquired 77% stake in an Indian e-commerce player Flipkart.

What to expect?

Amazon is still by far the most popular retailer for online grocery purchases. A survey by Coresight showed that 60% purchased groceries online from Amazon whilst only 25% preferred Walmart.

Having said that, Amazon is not so popular with the large ‘shoppers’ like Walmart is and an expected boost from its grocery business is anticipated. This comes to light especially in an era of increasing price transparency across U.S. retail and Walmart is expected to benefit from its significant investments in e-commerce, technology and international business.

Earnings: According to FactSet, Walmart is expected to report EPS of $1.33. This is the same as last year. Over the last 14 quarters, Walmart managed to beat FactSet EPS expectations 13 times.

Revenue: FactSet expects sales of $138.8 billion, up from $136.3 billion last year. Walmart missed FactSet sales expectations for the last two quarters.

How is the chart looking?

The 50 day and 200 day Moving averages have acted as support over the last couple of months whilst a trend line which started back in February 2017 was broken in December last year and it is now serving as a resistance.

Positive announcement tomorrow, together with good news coming from the China/US trade talks which will continue during this week will not only help to transform the resistance back to a support line but will give a further boost to the price for the months to come.

On the contrary, negative news will most likely be the precursor for things the come for the U.S. economy and the stock market in general.

1 - Comment

Christian Buhagiar

Christian Buhagiar - 19/02/2019 16:22 Reply