Walmart Beats Earnings But Sees Sales Growth Slow Down

Walmart (WMT) managed to exceed Wall Street expectations in its second-quarter financials on several fronts, but multiple analysts reduced their share-price targets due to concerns about sales growth.

The company reported revenues of $187.9 billion, a 5.9% year-over-year increase that surpassed consensus estimates of $186.8 billion. Earnings per share also came in at 81¢, exceeding expectations by a comfortable margin.

However, comparable-store sales growth of 2.6% fell short of the expected 3.5%, marking the slowest expansion for Walmart since 2020.

Analysts from Argus Research and Truist reduced their price targets to $130 per share and $114 per share respectively, citing a reduction in earnings estimates and increased cost of equity due to higher Treasury rates.

CFO John David Rainey acknowledged the impact of high gas prices on consumers during the second-quarter earnings conference call, stating that there is 'incremental pressure' on consumers due to rising fuel costs.

Despite this, analysts remain bullish on Walmart's prospects, with 36 Buy calls against six Holds and one Sell recommendation. Long-term earnings growth estimates sit around 9%.