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Is It Time to Invest in Walmart Before Q1 Earnings Release?Is It Time to Invest in Walmart Before Q1 Earnings Release?

Anticipating Q1 Performance

Walmart is gearing up to unveil its Q1 earnings report on May 16, the company’s first quarterly results since initiating a 3-1 stock split. This move to make its stock more accessible to retail investors has attracted significant attention. The upcoming report not only sheds light on Walmart’s financial standing but also offers insights into current consumer shopping trends, especially as fellow omnichannel retail giant Target prepares to report its earnings next week.

Performance Expectations

Analysts from Zacks estimate Walmart’s Q1 earnings to climb by 6% to $0.52 per share, with quarterly sales projected to have increased by 4% to $159.33 billion. The Zacks ESP hints at the possibility that Walmart might exceed earnings expectations, as the Most Accurate Estimate pegs Q1 EPS at $0.54, 2% higher than the Zacks Consensus. Notably, Walmart has surpassed bottom-line projections in three of its last four quarterly reports, with the most recent beat in Q2, where earnings at $0.60 per share outperformed the Zacks Consensus by 9%.

Growth & Future Outlook

Walmart’s annual earnings are anticipated to grow by 6% in the current fiscal year 2025 and are expected to rise further by 8% in FY26 to reach $2.55 per share. Total sales are also forecasted to increase by 4% in FY25, with Walmart’s top line predicted to expand by another 4% in FY26 to $699.86 billion.

Recent Performance & Valuation

Walmart’s stock has seen an 18% increase over the past year, a commendable feat although falling slightly short of the S&P 500’s 26% rise but surpassing Target’s 1% dip. Year to date, Walmart’s stock is up by 14%, outperforming both the S&P 500 and Target. In terms of valuation, Walmart trades at 25.6X forward earnings, slightly above the S&P 500’s 21.9X but notably higher than Target’s 17.1X. Looking at the price to sales ratio, Walmart’s forward P/S ratio of 0.7X is well below the optimum level of less than 1X, putting it on par with Target and significantly lower than the S&P 500’s 3.8X.

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Consideration for Investors

Prior to its Q1 report, Walmart’s stock is presently given a Zacks Rank #3 (Hold). Despite the strong start the company has had this year, its valuation suggests that better investment opportunities may arise in the future. However, long-term investors could still benefit from entering at current levels.