Retail giant Walmart (New York Stock Exchange: WMT) will report its second quarter results on August 16. Inflation and overstocking issues may continue to affect Walmart’s results, but his website traffic tool in TipRanks shows an improving trend. It remains to be seen whether the second-quarter results were similarly strong, or whether the lower earnings guidance in the second quarter was a precursor to poor performance.
Walmart Web Visit Trend Rising
Walmart’s e-commerce business continues to gain momentum, according to TipRanks’ website traffic tool. According to the tool, visits to his websites at walmart.com and his two others increased by 11.83% quarter-on-quarter in the second quarter. Additionally, on a year-on-year basis, traffic increased by 26.43%.
This is consistent with management’s recently updated guidance for the second quarter. Walmart recently announced that second-quarter comparable sales (for Walmart US excluding fuel) were up 6% compared to previous guidance of a 4-5% increase.
The increase in guidance is due to the higher share of food and consumables in overall sales. It also reflects the growing penetration of e-commerce sales.
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WMT Margins Remain Low
Improving traffic trends are encouraging and suggest WMT sales could improve, but increased mix of food and consumables (low-margin products) could weigh on margins. I have. In addition, higher markdowns to clear excess inventory also reduce profit margins.
WMT CEO Doug McMillon said:
Given margin pressure, Walmart cut its earnings guidance for the second quarter. WMT expects adjusted EPS to decline 8-9% in the second quarter. This compares favorably with previous forecasts that said his EPS in the second quarter could be flat or improve slightly.
Is Walmart a good stock to buy now?
Many analysts believe Walmart stock is worth buying. Despite short-term challenges, improved web traffic numbers show that Walmart’s digital strategy resonates with consumers. This is positive and positions WMT well to take advantage of the ongoing digital shift.
Guggenheim analyst Robert Drbul highlighted WMT’s digital strategy, saying: WMT continues to expand its offerings while generating revenue and is impressed with its sustained e-commerce growth and increasing share. That strength will accelerate his investment in WMT’s infrastructure and allow him to fully optimize his strategy, which he believes will accelerate WMT’s revenue and profit growth in the medium to long term. increase. ”
Drbul is bullish on WMT shares, with his $155 price target suggesting a 17.2% upside potential. Including Drbul, WMT stocks received 24 He Buy and He 7 Hold recommendations, resulting in a strong buy valuation consensus. Moreover, his average price target of $145.10 for analysts suggests a 9.7% upside potential.
At the same time, physical store visits did not necessarily increase with digital visits, so Walmart’s enhanced digital facets may not translate to improved overall financial results.