Walmart May Return to Beat-And-Raise Cycle

Walmart Inc. (NASDAQ: WMT ) is scheduled to release its fiscal 2027 second-quarter earnings results on Aug.

20 before the market opens, with Bank of America Securities analyst Christopher Nardone expecting the retail giant could return to a beat-and-raise cycle despite signs of softer spending among lower-income consumers.

Nardone reiterated a Buy rating and $144 price forecast on Walmart ahead of the report.

The analyst said accelerating digital sales and improving profit margins could support results even if U.S. comparable-sales growth slows.

Walmart Earnings Beat Still In Play Bank of America forecasts second-quarter adjusted earnings of 74 cents per share.

The firm lowered its Walmart U.S. comparable-sales forecast, excluding fuel, to 3.5% from 4%.

The analyst estimates that every 50-basis-point shortfall in second-quarter U.S. comparable sales would reduce Walmart's full-year net sales growth by about 10 basis points.

Still, strength elsewhere in the business could allow Walmart to beat expectations and raise its outlook.

Walmart previously guided for second-quarter constant-currency net sales growth of 4% to 5%, down roughly 100 basis points from the first quarter's 5.7% growth.

Bank of America expects 4.6% growth.

The firm said the slowdown reflects the end of tax-refund benefits, less help from general merchandise pricing and some moderation among lower-income consumers.

Price Cuts Could Fuel Market-Share Gains The analyst expects Walmart's July 6 price investments to help the retailer gain market share in the second half of the year.

A larger Marketplace assortment and faster delivery should also support those gains.

Bank of America said the investments were already included in Walmart's guidance and should not create additional margin risk.

Tariff-related refunds could create a margin headwind next year as Walmart laps those benefits.

However, high-growth, high-margin businesses such as advertising could help fund further price investments.

Digital Business Becomes A Bigger Profit Driver The analyst also highlighted Walmart's digital businesses as an increasingly important part of the investment case.

Global advertising revenue grew 36% in the first quarter, while Marketplace sales jumped nearly 50%.

Membership fee revenue also remained strong.

Bank of America said e-commerce and alternative revenue streams could improve profitability even if core U.S. comparable-sales growth remains in the 3% to 4% range.

The firm forecasts fiscal 2027 adjusted earnings of $2.90 per share, followed by $3.20 in fiscal 2028 and $3.53 in fiscal 2029.

It expects fiscal 2027 revenue of about $753.42 billion.

Bank of America's $144 price forecast is based on 45 times its fiscal 2028 adjusted earnings estimate.

The premium reflects expectations for positive U.S. comparable sales, continued market-share gains and operating income growth at nearly twice the pace of sales growth.

Read Also: Zohran Mamdani Targets Walmart, Amazon, Target and Others Over 'Illegal' E-Bikes and E-Scooters: 'Too Many Lives Have Been Cut Short' Walmart Analyst Ratings Ahead Of Earnings Walmart carries a consensus Buy rating with an average price forecast of $141.11.

Recent analyst actions include: RBC Capital Markets: Outperform, with a $137 price forecast on Aug.

12.

Oppenheimer: Upgraded Walmart to Perform on Aug.

4.

Bernstein: Outperform; lowered its price forecast to $142 from $145 on July 31.

BTIG: Buy, with a $145 price forecast on June 8.

Tigress Financial: Buy; raised its price forecast to $155 from $150 on May 29.

UBS: Buy; lowered its price forecast to $141 from $147 on May 22.

BNP Paribas: Outperform; lowered its price forecast to $146 from $147 on May 22.

Walmart Q2 Earnings Preview Wall Street expects Walmart to report second-quarter adjusted earnings of 74 cents per share, up from 68 cents a year earlier.

Revenue is expected to rise to $186.77 billion from $177.40 billion.