Will Q3 earnings propel Wal-Mart Stores Inc (NYSE:WMT) stock to $100 mark?
Shares of Bentonville, Arkansas-based offline retail giant Wal-Mart Stores Inc (NYSE:WMT) have come to life in 2017 and are having their best run in recent years, up nearly 30% in the year-to-date. Walmart stock's recent bull run has increased the expectations from its fiscal third-quarter earnings, which is scheduled for today before the opening bell. WMT stock has been on a steady uptrend going into earnings since the beginning of October but closed in the red during yesterday's trade. Wall Street is also turning more bullish about the prospects of the brick-and-mortar retail behemoth ahead of earnings as Rupesh Parikh of Oppenheimer raised his price target on the Walmart stock to $100 and reiterated his Outperform rating. Now, the question is, can Q3 earnings set WMT stock on a post-earnings rally?
Moving on to analyst estimates, the average consensus estimates for Walmart's fiscal third-quarter earnings are a non-GAAP EPS of 97 cents per share on revenue of $121 billion. The earnings estimates are lower than the last year same quarter EPS by 1 cent while the revenue estimate suggests a minor 2.4% YoY growth. The company had guided for EPS to come in the range of 90 cents to 98 cents per share. The earnings history of Walmart stock suggests an earnings beat is on the cards as the company has beaten earnings estimates in all of the last 8 quarters. Though the retail giant does not have a great record when it comes to beating revenue estimates, having beaten revenue estimates in only four of the last eight quarters. The earnings whisper number, called the Wall Street's unofficial number, of 99 cents per share also suggests an earnings beat. However, Walmart needs more than an earnings beat for a post-earnings pop as we have seen Target (NYSE:TGT) stock crashed yesterday even after reporting strong estimates beating Q3 numbers. The reason for the crash being below par guidance coupled with Jeff Bezos led Amazon (NASDAQ:AMZN) cutting Whole Foods prices further for its prime members. With retailers getting into holiday season slugfest, the Q4 quarter guidance is very crucial for WMT stock. The world's largest offline retailer's eCommerce sales growth is also likely to be closely watched in the earnings release today.
Can earnings drive Best Buy Co Inc (NYSE:BBY) stock higher?
[Update: Best Buy unlike the other retail earnings today posted lackluster earnings reporting an EPS which was just in-line and a miss on both the top line numbers in its Q3 earnings release. The consumer electronics retailer reported non-GAAP EPS of 78 cents per share which was at the midpoint guidance range of 75-80 cents per share. On the revenue front, the company reported revenues of $9.32 billion, up 4% YoY but $40 million less than the street's estimates. The holiday season outlook also disappointed as it fell short of expectations on the earnings front. The company guided Q4 revenue to be between $14.2 billion to $14.5 billion while the analyst consensus estimate was $14.36 billion. Coming to earnings, Best Buy gave an EPS outlook of $1.89 to $1.99 per share whereas the analysts were expecting an EPS of $2.03 per share.]
The second major earnings today is of consumer electronics retail chain Best Buy (NYSE:BBY), which will also report earnings before the market open. Best Buy stock has largely moved sideways heading into earnings only to gain some momentum over the last 5 days. A Bloomberg report suggests today could be a very volatile trading day as the options trading volume hint at a 9% move in BBY stock price either way after the earnings release, higher than the historic average of a 7% move. With the investors having a negative sentiment toward retailers of late, the retail company cannot afford any negative surprises in the earnings release.
Coming to Wall Street estimates, analysts expect the company to report an EPS of 78 cents per share, while the company had reported EPS of 60 cents in the fourth quarter last year. The YoY EPS growth of 25.8% this quarter is less than that of 51% YoY growth registered in the same quarter last year. On the top line front, Wall Street expects Best Buy to report revenues of $9.36 billion, 4.6% higher than what the company had reported last year.
The top management had guided revenues for Q3 to be in the range of $9.3-9.4 billion while EPS outlook was between 75 and 80 cents per share. As usual, the holiday quarter guidance will be crucial for Best Buy stock as well. Investors could be expecting Best buy to crush Wall Street earnings estimates as it has beaten the high end of the street estimates in 7 out of the last 8 quarters. The earnings whisper number of 84 cents per share also hints towards that. The firm online sales growth has contributed immensely to the Best Buy's earnings growth which has reflected in the stock's gain this year, and again it would be under focus today.
Can Applied Materials, Inc. (NASDAQ:AMAT) stock still rise higher post-earnings after more than 70% YTD gains?
The equipment manufacturing company Applied Materials (NASDAQ:AMAT) is the third major earnings for the day, which has its fiscal fourth-quarter earnings release scheduled after the market close. Applied Materials stock, also happens to be part of our top tech stocks to buy list which have outperformed the Nasdaq Composite by over 159%. Rightly, AMAT stock deserves a place there as the stock has gained nearly 90% in the last one year. Give the Applied Materials stock's bull run this year, the semiconductor equipment company will be expected to continue its strong earnings and revenue growth.
The company also provided a strong guidance for the fourth quarter with revenues to come in the range of $3.85 billion to $4 billion, up nearly 19% YoY at the midpoint. While the EPS outlook was $0.86 to $0.94 per share, a 36% YoY growth at the midpoint. The analyst estimates for AMAT are an EPS of 94 cents per share on revenue of $3.94 billion. These estimates translate into 19.5% YoY top line growth and 38% bottom line growth over the previous year. Given the strong earnings and revenue growth, the fiscal 2019 guidance needs to sustain the high growth rates for the stock to maintain its bull run. Investors would also be closely watching any updates about any new deals in China as Applied Materials was also said to be part of the delegation on President Trump's visit to China. The earnings whisper number for Applied Materials is 93 cents per share.
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