Walmart Inc. (NYSE:WMT) investors will be delighted, with the company turning in some strong numbers with its latest results. The company beat both earnings and revenue forecasts, with revenue of US$134b, some 2.1% above estimates, and statutory earnings per share (EPS) coming in at US$1.40, 31% ahead of expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, Walmart's 21 analysts currently expect revenues in 2021 to be US$537.0b, approximately in line with the last 12 months. Statutory earnings per share are expected to decrease 3.1% to US$5.12 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$538.4b and earnings per share (EPS) of US$5.05 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$130. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Walmart analyst has a price target of US$145 per share, while the most pessimistic values it at US$98.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Walmart's revenue growth is expected to slow, with forecast 0.4% increase next year well below the historical 2.0%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.9% per year. Factoring in the forecast slowdown in growth, it seems obvious that Walmart is also expected to grow slower than other industry participants.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Walmart's revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Walmart going out to 2025, and you can see them free on our platform here.
Even so, be aware that Walmart is showing 1 warning sign in our investment analysis , you should know about...
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