Walmart raised its full-year outlook on Thursday after beating earnings estimates for the second quarter. Shares of Walmart stock flashed an early entry, jumping to record highs intraday.
Dow Retail Giant Allays Recession Fears
Walmart said it guided higher based on strength in the first half of the year. But the Dow Jones retail giant remains cautious for the rest of 2024, due to factors such as the U.S. presidential elections in November and the Middle East conflict.
"In this environment, it's responsible or prudent to be a little guarded with the outlook," Walmart CFO John David Rainey told CNBC on Thursday. "But we're not projecting a recession."
Walmart Earnings Beat-And-Raise
On Thursday, Walmart reported earnings of 67 cents per share on revenue of $169.34 billion. Year over year, earnings grew 10% and sales rose 5%. Earnings growth slowed sharply from Q1's 22% jump. Revenue growth was down slightly vs. the prior four-quarter average.
Analysts had expected Walmart EPS of 65 cents on revenue of $168.565 billion, according to FactSet.
Management on Thursday guided full-year earnings of $2.35-$2.43 per share, up from $2.23-$2.37 previously. Analysts had forecast full-year EPS of $2.44, a 10% increase, FactSet shows.
For Q3, Walmart is targeting EPS of 51 cents-52 cents, below the FactSet consensus of 55 cents.
Walmart Stock Offers Early Entry
Shares jumped 6.6% on Thursday, helping to lead the Dow Jones Industrial Average higher. The move sent Walmart stock back above its converged 50-day and 21-day exponential moving averages. That provided an early entry for aggressive investors.
The Dow retail stock has now gained 20% from the breakout that followed its Q1 report in May. It has a year-to-date gain of about 39%, benefiting from the consumer hunt for value amid inflation.
Amazon, Home Depot: Consumers More Cautious
Fellow Dow big-box retailer Home Depot warned on Tuesday that it expects sales to weaken as consumers grow more cautious. Home Depot stock rose on Thursday for a third straight day.
Another Dow Jones retailer, Amazon confirmed during Q2 earnings on Aug. 1 that consumers continue to trade down. The e-commerce giant said shoppers continue to seek deals and focus more on everyday items, while avoiding larger-ticket purchases.
Amazon stock rallied 3.1% on Thursday.
Multiple Growth Drivers
On Monday, CFRA Research analyst Arun Sundaram noted rising risks of a consumer slowdown.
Despite those risks, Sundaram said he holds a positive, long-term view on the Dow Jones retail leader.
"We believe Walmart has many levers to grow operating income faster than sales over the next few years," he wrote in a note to clients.
Among examples, the analyst cited "improving (first-party/third-party) e-commerce profitability, growing private label penetration (and) increasing mix of higher-margin service streams."
Those service streams include advertising, data monetization, fulfillment services and membership income, he added.
