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Walmart delivers with upgrade to forecasts as it gains market share
Walmart (WMT:NYSE) $141.76
Loss to date: 2.8%
Original entry point: Buy at $145.80, 11 February 2021
US supermarket giant Walmart posted first quarter results which breezed past analysts’ forecasts and the company raised its second quarter and full year guidance.
Sales of $138.3 billion were comfortably ahead of consensus estimates of $132 billion, while earnings per share of $1.69 easily topped estimates of $1.21 as the firm cashed in on stimulus spending by US consumers.
President and chief executive Doug McMillon said he was ‘encouraged by traffic and grocery market share trends’ and was more optimistic about the business than he had been at the start of the year.
While stimulus spending is expected to slow, analysts believe Walmart can continue to gain market share on the back of its low prices, its well-developed delivery service and free collection options. In particular, it is seen benefiting from faster growth in online grocery spending by lower-income consumers.
For the second quarter, the firm now expects its US operating income to grow by high single digits instead of growing ‘slightly’ and for earnings to grow by low double digits excluding divestitures rather than being ‘flat to up slightly’ as previously forecast.
SHARES SAYS: A decent update and we remain confident that the shares will reward investors in time.