Strong Performance Continues

Walmart has been on a winning streak with its earnings, consistently meeting or exceeding Wall Street's expectations for the past six quarters. As the company gears up to report its earnings on Tuesday morning, analysts are bullish about another stellar performance.

High Hopes for Fiscal Fourth Quarter

Analysts are anticipating Walmart to report adjusted earnings of $1.64 per share for its fiscal fourth quarter, with sales expected to increase by 4% to $170.9 billion in revenue. The solid holiday season is believed to have contributed to these optimistic projections.

Resilience in the Face of Economic Challenges

Despite the current economic challenges such as inflation and high interest rates, Walmart has remained a go-to destination for many consumers seeking value for their money. This shift towards value-focused retailers like Walmart is expected to further bolster the company's quarterly results.

Looking Beyond the Numbers

While a strong earnings report is anticipated, investors will be closely watching Walmart's guidance for fiscal 2024. The company's outlook for the coming year will play a crucial role in determining the stock's performance post-earnings release. Analysts are particularly interested in management's tone regarding the future.

Analyst Insights

According to Evercore ISI analyst Greg Melich, Walmart is likely to meet expectations but could see a slight dip in its stock value post-earnings. This potential decline is attributed to the cautious guidance expected from management regarding consumer behavior in the upcoming fiscal year.

Walmart Set to Address Inflation Concerns

Investors will be closely eyeing Walmart's upcoming earnings report for any insight into the impact of inflation on the retail giant. While rising prices have boosted Walmart's revenue, inflation has also posed challenges for consumer spending on non-essential items.

Deflation Fears Spark Market Reaction

CEO Doug McMillon's remarks about a potential deflationary environment in the U.S. during the last earnings call caused a stir among investors. Deflation, marked by falling prices, could hinder revenue growth and squeeze margins. Although Walmart clarified that deflation is not the expected scenario for the future, market watchers remain vigilant for updates.

Stock Performance Highlights

Walmart's stock reached an all-time high last Friday, recording an impressive 8% gain in 2024. In contrast, the S&P 500 saw a 5% increase during the same period.

Stock Split Strategy

In a strategic move, Walmart announced a three-for-one stock split scheduled for later this month. The split aims to make the stock more accessible to new investors and employees, potentially opening doors for increased participation in the market.

Post-Earnings Investment Opportunity

Following Tuesday's earnings report, there may be an opportunity for investors to enter or add to their positions in Walmart. Despite previous sell-offs post-earnings, analysts view these dips as temporary setbacks, urging investors to consider leveraging these moments.

Analysts Bullish on Walmart's Future

Analysts like Rupesh Parikh from Oppenheimer remain optimistic about Walmart's growth prospects in the near to medium term. With the bull case still unfolding, there is potential for sustained outperformance over the next 12-18 months.

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