Walmart and Target Set to Reveal Key Q3 Earnings This Week
The earnings reports from retail heavyweights Walmart WMT and Target TGT will be a focal point of this week’s financial news.
Both companies are expected to show solid growth as they prepare to release their third-quarter earnings on Tuesday, November 19, and Wednesday, November 20, respectively.
Walmart’s Sales Forecast
According to Zacks estimates, Walmart’s Q3 sales are anticipated to increase by 4%, reaching $167.49 billion. For earnings per share (EPS), Walmart’s Q4 is projected to rise 4% as well, hitting $0.53 compared to $0.51 last year.
In its last quarter report, Walmart exceeded expectations by 3% in August, posting EPS of $0.67 against estimates of $0.65. Over the last nine quarters, Walmart has consistently met or surpassed the Zacks EPS consensus, averaging a 6.89% earnings surprise in the past four quarters.
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Target’s Sales and Earnings Outlook
Target is also making strides in reducing inventory losses, with its Q3 sales projected to climb 2% to $25.94 billion. EPS for Q3 is expected to rise 9% to $2.29, compared to $2.10 from the same period last year.
In its previous report, Target outperformed EPS estimates by nearly 19% in August, reporting earnings of $2.57 per share versus the expected $2.16. The company has exceeded the Zacks EPS consensus in three of the last four quarters, boasting an impressive average earnings surprise of 20.26%.
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Stock Performance Overview
Price Performance
Due to its affordable pricing, Walmart has attracted more customers during recent years of rising inflation, significantly growing its online sales. Consequently, Walmart’s financial performance has improved, with its stock up approximately 60% year-to-date, while the benchmark S&P 500 is up by 23% and Target’s stock is up by 10%.
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Valuation Insights
While Walmart’s stock has outperformed in price, Target stands out due to its valuation metrics. Currently, Target’s stock is trading at 15.9X forward earnings, offering a discount compared to the S&P 500’s 24.8X and Walmart’s 34.4X.
Additionally, Target’s valuation sits below its peak of 30.4X forward earnings over the last ten years and is slightly below its median of 16.2X. Conversely, Walmart is trading close to its historic high of 34.7X, exceeding its long-term median of 22X. Furthermore, both companies maintain a sales multiple under 2X, which is considered optimal.
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Dividend Comparison
When it comes to dividends, Target leads with an impressive 2.95% annual yield, outpacing Walmart’s 0.99% and the S&P 500 average of 1.22%.
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Conclusion
As they approach their Q3 earnings announcements, Target’s stock holds a Zacks Rank of #2 (Buy), while Walmart has a Zacks Rank of #3 (Hold). Notably, Target’s more favorable P/E valuation is supported by significant earnings estimate revisions for the current fiscal year.
Walmart’s EPS estimates have not changed over the past three months, yet both companies anticipate steady growth in their profits moving forward.
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Target Corporation (TGT): Free Stock Analysis Report
Walmart Inc. (WMT): Free Stock Analysis Report
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
