NEW YORK — Walmart Inc. reports first-quarter earnings before the market opens May 21, with Wall Street anticipating a critical update on consumer spending. Consensus estimates project earnings per share of $1.60 on revenue of $159 billion, a 4 percent increase year-over-year.
Investors will scrutinize U.S. comparable store sales, excluding fuel, for indications of how inflation and higher interest rates are shaping purchasing habits across its customer base. Analysts at Morgan Stanley expect U.S. comparable sales to rise 3.2 percent, a deceleration from the 4.7 percent reported in the prior quarter.
While grocery sales likely remain a core strength, aided by Walmart's value proposition, discretionary spending on general merchandise faces pressure. E-commerce growth figures, particularly for same-day delivery and pickup services, will also influence investor sentiment.
JPMorgan maintained an Overweight rating on Walmart, setting a price target of $72 per share. The firm cited Walmart's inventory management and pricing strategies as competitive advantages in a challenging retail environment. This target implies 15 percent upside from recent trading levels if the company meets or exceeds market expectations and provides strong guidance.
Management's updated full-year guidance will be critical for investor confidence, especially regarding revenue and operating income forecasts. Any revisions to profit or sales outlooks could move the stock substantially. Analysts also plan to assess the impact of cost-saving initiatives, wage costs and the continued growth of Walmart's advertising business, which has become a meaningful profit driver.
The retail giant's ability to maintain traffic and average ticket size against tighter household budgets will provide a bellwether for the entire sector. Walmart's performance offers a snapshot of the U.S. consumer's financial health, particularly for essential goods, as interest rates remain elevated and economic growth moderates.
