On 31 July 2019, Walmart Inc. (NYSE:WMT) released its earnings update. Generally, analyst consensus outlook appear cautiously optimistic, with profits predicted to increase by 12% next year relative to the past 5-year average growth rate of -15%. With trailing-twelve-month net income at current levels of US$6.7b, we should see this rise to US$7.5b in 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Walmart in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How will Walmart perform in the near future?
The longer term view from the 21 analysts covering WMT is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of WMT’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
By 2022, WMT’s earnings should reach US$8.0b, from current levels of US$6.7b, resulting in an annual growth rate of 2.4%. This leads to an EPS of $5.7 in the final year of projections relative to the current EPS of $2.28. By the end of 2022, analysts are expecting earnings to outpace revenue, and margins to expand from the current 1.3% to 1.4%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Walmart, there are three relevant factors you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Walmart worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Walmart is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Walmart? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.