By Senad Karaahmetovic
Walmart (NYSE:WMT) stock is trading about 6% higher in pre-open Tuesday after the retailer reported better-than-expected results for its third quarter and raised the full-year forecast.
Walmart reported an EPS of $1.50 on revenue of $152.8 billion, easily beating the analyst consensus of $1.32 on sales of $147.55B. The company’s U.S. business saw comparable sales surge by 8.2% while the Walmart-only U.S. comparable ticket increased by 6%.
The company reported that its Q3 inventory rose by 12.4% with the company blaming high inflation on this trend. Still, CEO Doug McMillon said Walmart enjoyed a “good quarter.”
“We significantly improved our inventory position in Q3, and we’ll continue to make progress as we end the year,” he said in a press release.
On the guidance front, Walmart increased its full-year outlook for net sales to +5.5%, up from the prior +4.5%. The adjusted EPS forecast is now expected to fall between 6-7%, better than the prior expected decline of 9-11%. Walmart-only U.S. stores comparable sales ex-gas are seen at +5.5%, beating the Bloomberg consensus of +4.19%.
Walmart said its board authorized a new $20B share buyback program.
On the call with analysts, Walmart CFO John Rainey said the company has seen “incremental levels of inflation month-over-month be less significant, but it's not clear if this represents a sustainable trend.”
Stifel analysts said Walmart delivered “strong” results with both comp. Sales and EBIT above consensus.
“Overall we view the result as encouraging as strong comp upside reflects U.S. grocery share gains, benefitting from inflation, with sequential improvement across key merchandise categories. We anticipate consensus EPS increases ~3%-4%, with additional upside likely reflecting the magnitude of the U.S. comp beat,” the analysts said in a client note.
Goldman Sachs analysts said the Walmart stock reaction after the earnings print is justified given the beat-and-raise quarter.