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Research Alert: Wmt: Strong Quarter, But Higher Fuel And Lack Of Guidance Raise Disappoints

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CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:

Adj-EPS of $0.66 (+8% Y/Y) met the consensus, though operating income growth of 7.6% to $7.7B was pressured by $175M in higher fuel costs. Excluding fuel headwinds, operating income would have grown 10.0% with margins expanding 10 bps to 4.4%. Walmart U.S. delivered strong comp sales growth of 4.1% with transactions up 3.0%, due to mid-single digit grocery growth and standout general merchandise performance reflecting the highest share gains in five years. For Q2 FY 27 (Jan.), WMT guides adj-EPS of $0.72-$0.74 (vs. consensus $0.75) and reiterated its full-year outlook of $2.75-$2.85. E-commerce remained robust with store-fulfilled delivery up about 45% and marketplace sales up nearly 50%. Alternative revenue streams now contribute roughly one-third of consolidated operating income, with global ad revenue up 37% and membership fees rising 17%. We think the lack of a more optimistic outlook will disappoint investors, as we believed WMT would hike guidance given strong underlying momentum.

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