To The Moon

Walmart (NYSE:WMT) is scheduled to announce Q1 earnings results before market opens on Tuesday, May 17, while Target (NYSE:TGT) will post its financial results before market opens on Wednesday, May 18.

Latest Results

Walmart reported Q4 net revenue 0.5% increase to $152.87 billion, beating analysts' average estimate of $151.53 billion, or a 0.4% fall. Sales at its U.S. stores open at least for a year rose 5.6%, excluding fuel, in line with analysts' estimates, helped by a 3.1% rise in transactions. However, online sales growth in the United States was just 1%, compared with a 69% surge a year earlier and 8% in the previous quarter. The company also raised its annual dividend by 2% to $2.24 per share.

Target posted Q4 earnings excluding some items climbed to $3.19 a share, topping the $2.88 average of analyst estimates compiled by Bloomberg. Comparable sales rose 8.9%, trailing expectations for a gain of more than 10%.

Company Guidance

Walmart Inc forecast full-year profit and U.S. sales above market expectations, signaling a steady demand at stores even as supply-chain issues and rampant cost inflation pressure the retail giant's margins. The company said it expects fiscal 2023 adjusted earnings per share to increase 5% to 6%, while analysts had expected a 4.4% increase, according to Refinitiv data. Walmart expects fiscal 2023 U.S. comparable sales to increase slightly more than 3%, while analysts were expecting a 2.8% increase.

Target also unveiled a longer-term outlook for the years beyond 2022, in which it pledged to build on the extraordinary sales gains recorded since the beginning of the pandemic. While growth will slow, Target said operating income and total revenue is expected to rise in the mid-single digits and adjusted earnings will increase in the high single digits. Target expects profit to vary from one quarter to the next “and generally improve as the year progresses.” That echoes Walmart Inc.’s outlook and signals Target’s belief that demand will hold in spite of the highest inflation rate in four decades and slumping consumer confidence.

Analyst Opinions

Analysts expect Walmart Q1 to post earnings of $1.47 per share. This would mark a year-over-year decline of 13.02%. Meanwhile, Zacks' latest consensus estimate is calling for revenue of $138.12 billion, down 0.14% from the prior-year quarter.

Looking at the full year, Zacks Consensus Estimates suggest analysts are expecting earnings of $6.77 per share and revenue of $589.42 billion. These totals would mark changes of +4.8% and +2.91%, respectively, from last year.

Valuation is also important, so investors should note that Walmart has a Forward P/E ratio of 22.1 right now. This valuation marks a premium compared to its industry's average Forward P/E of 11.38.

Investors should also note that WMT has a PEG ratio of 4.02 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Retail - Supermarkets industry currently had an average PEG ratio of 1.05 as of yesterday's close.

According to Zacks, Target is expected to post quarterly earnings of $2.96 per share in its upcoming report, which represents a year-over-year change of -19.8%.

Revenues are expected to be $24.21 billion, up 0.1% from the year-ago quarter.

The consensus EPS estimate for the quarter has been revised 1.26% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.

Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.