Walmart(US:WMT) ZACKS·2025-11-18 13:46Core Insights - Walmart Inc. is set to report its third-quarter fiscal 2026 earnings on November 20, with expectations of solid performance driven by strong momentum in both store and digital channels, an improved merchandise mix, and increasing contributions from membership and advertising [1][10] Revenue and Earnings Estimates - The Zacks Consensus Estimate for third-quarter revenues is $177.1 billion, reflecting a 4.5% increase year-over-year, while the consensus for earnings has risen to 61 cents per share, marking a 5.2% increase from the previous year [2] - Walmart has a trailing four-quarter average earnings surprise of 2.8%, although it experienced a negative earnings surprise of 6.9% in the last reported quarter [2] Earnings Prediction - The Zacks model predicts an earnings beat for Walmart, supported by a positive Earnings ESP and a Zacks Rank of 3 (Hold) [3][4] Factors Influencing Q3 Earnings - Steady demand and market share gains are expected to be reflected in the upcoming results, with consistent performance across income groups and strength in grocery and consumables [5] - Digital sales momentum is significant, with global e-commerce sales growing 25% in the second quarter, driven by store-fulfilled delivery and a robust marketplace [6] - Higher-margin businesses are contributing positively, with advertising revenue increasing by 46% globally and membership income rising over 15% [7] - International markets, including China and Flipkart, are showing strong constant-currency growth, although currency fluctuations may pose challenges [8] Challenges Ahead - Tariff-related cost increases and elevated self-insured liability and workers' compensation costs are key headwinds for the quarter [9][10] Stock Performance - Over the past year, Walmart's stock has increased by 18.9%, outperforming the Zacks Retail – Supermarkets industry growth of 18.3% and the S&P 500's rise of 15.7% [11] - Walmart's stock has surpassed competitors like Kroger, Costco, and Target in terms of stock performance [13] Valuation Metrics - Walmart shares are currently trading at a forward 12-month price-to-earnings ratio of 36.02, above the industry average of 32.78, indicating a premium valuation due to consistent execution and stronger digital profitability [14][16] Investment Outlook - With solid traffic trends, strong omnichannel growth, and expanding higher-margin profit streams, Walmart is positioned for stability and steady growth, despite near-term hurdles [18]