“Is Walmart Stock Just Gonna Crash Again This Quarter?”
Walmart’s FY’2023 ended in January 2023. Walmart (NYSE: WMT), the big fish in the retail pond, is gearing up to release its fiscal third-quarter results on Thursday, November 16. But don’t hold your breath for a celebratory surge in WMT stock. The company’s anticipated Q3 sales hike of 3% y-o-y and projected adjusted EPS in the range of $1.45 and $1.50 are likely set to disappoint.
Walmart’s $50.4 billion debt and relatively puny $13.9 billion in cash and cash equivalents are ringing alarm bells. High financing rates add further complexity, increasing the long-term risk for the retailer and inflating interest costs. If that’s not enough, the company is also facing a slowdown in U.S. comparable sales growth, marking 6.4% in Q2’24 following 7.4% in Q1’24. Could the upcoming Q3 results continue this downward spiral?
Yes, Walmart stock has enjoyed an 18% rise this year, but let’s not forget the roller-coaster ride from 0% in 2021 to a dismal -2% in 2022. Shamefully, it underperformed the S&P 500, which saw 27% returns in 2021, despite some ups and downs. The question remains: will Walmart face a déjà vu of its 2021 underperformance or pull off a spectacular comeback?
Our forecast pegs Walmart’s valuation at $153 per share, a hefty 8% lower than the current market price. The company’s Q3 2024 revenues are expected to hover around $157.1 billion, slightly missing consensus estimates. Likewise, WMT’s Q3 2024 earnings per share (EPS) is anticipated to be $1.48, slightly lagging behind consensus estimates. That’s not the end of it – our valuation with an EPS estimate of around $6.14 and a P/E multiple of 25.0x in fiscal 2024 translates to a price of $153, further dashing hopes for stockholders.
So, buckle up and brace for impact as Walmart gears up to reveal its performance. Will it rise from the ashes or continue its downward spiral? Only time will tell.