Easing Inflation, Holiday Trends to Shape Walmart’s Q3: EPS at $0.53 Expected

What Can Traders Expect from Walmart’s Q3 Earnings?

Walmart is set to report fiscal third-quarter earnings before the bell on Tuesday, offering key insights into consumer sentiment and the outlook for the critical holiday season. Analysts surveyed by LSEG project earnings per share of $0.53 and revenue of $167.72 billion, reflecting a 4.4% year-over-year increase.

As the nation’s largest retailer, Walmart’s performance will provide a snapshot of broader retail trends, especially as inflation moderates and holiday spending forecasts show only modest growth.

Will Inflation and Holiday Trends Boost Walmart’s Results?

Moderating inflation, with lower gas prices and easing grocery costs, has improved consumer spending power. However, a shortened holiday season and unseasonably warm weather in parts of the U.S. could limit upside potential for retailers.

The National Retail Federation forecasts holiday spending to rise between 2.5% and 3.5% this year, a slower pace than last year’s 3.9% increase. Walmart’s significant grocery business and growing online sales give it an edge. Analysts expect Walmart’s full-year sales to rise between 3.75% and 4.75%, with adjusted earnings per share reaching $2.35 to $2.43.

How Are Analysts Viewing Walmart Stock?

Analysts remain bullish on Walmart, with 22 of 23 tracked by Visible Alpha giving it a “buy” rating. The stock has climbed 60% year-to-date, supported by the company’s ability to attract shoppers across income levels. Initiatives like smaller packaging, competitive pricing, and Walmart+ membership enhancements have further bolstered performance.

Net income is expected to rebound sharply to $4.24 billion in Q3, compared to $453 million a year ago when investment-related write-downs weighed on results. Adjusted profits are projected at $4.26 billion, slightly higher than $4.13 billion in Q2.

Could Advertising Revenue Drive Profitability?

Advertising revenue, which offers higher profit margins, is another bright spot for Walmart. Analysts see this segment as a key growth lever, contributing to profitability as Walmart continues to gain market share across product categories and income levels.

Market Forecast: Bullish on Walmart’s Earnings Prospects

With expectations of strong revenue growth and profitability, Walmart’s Q3 results could reinforce its position as a reliable stock in a mixed economic environment. Modest holiday spending growth and macroeconomic concerns may temper broader retail gains, but Walmart’s value-driven approach and growing digital ecosystem suggest a bullish outlook for its stock in the near term.

Technically, as long as the 50-day moving average, currently at $81.42 continues to provide support and upward guidance, the strong intermediate uptrend will remain intact.