3 Things I'll Be Watching in Walmart's Upcoming Earnings Report (and 2 I'll Ignore)

Core Viewpoint - The upcoming earnings report from Walmart is anticipated to provide insights into consumer behavior and the impact of tariffs on the company's performance, with a focus on metrics beyond traditional quarterly earnings [1][2]. Group 1: Earnings Expectations - Analysts expect Walmart to report earnings of $0.58 per share on sales of $164.5 billion for the three-month period ending in April, reflecting a 2% increase in revenue compared to $161.5 billion a year ago [4]. - Rising costs are expected to negatively impact the bottom line, with a decrease from the previous year's per-share earnings of $0.60 [4]. - U.S. same-store sales growth is likely to have slowed from 4.9% in the previous quarter, indicating the effects of inflation and economic uncertainty on consumer spending [4]. Group 2: Key Metrics for Long-Term Health - The growth of Walmart's retail media business, which includes advertising, is a critical metric; the company is expected to report a percentage change in this area, likely in the mid-20% range, following a 28% year-over-year increase to $3.4 billion last year [7]. - The cost of goods sold and operating costs are essential to monitor, particularly in light of tariff-induced price increases; the previous quarter's gross margin rate was around 24% [9]. - Walmart's e-commerce growth is another vital area, with online sales having improved by 16% overall and 20% in the U.S. in the last quarter, although this represents a slowdown compared to previous growth rates [12][13]. Group 3: Market Reactions and Long-Term Outlook - Initial market reactions to Walmart's earnings report may focus on revenue and earnings data, but these figures may be skewed by tariff-related issues [14][15]. - RBC Capital Markets suggests that Walmart is better positioned than competitors to manage tariff challenges due to its scale and operational flexibility, indicating that any short-term issues may be resolved quickly [15]. - The long-term perspective should consider the aforementioned metrics, which provide a clearer understanding of Walmart's navigation through the current economic landscape [16].