Wal-Mart Stores, Inc
) is set to report its first-quarter fiscal 2014 results on May
16 before the market opens. Last quarter, it posted a 6.37%
positive surprise. Let's see how things are shaping up for this
Growth Factors this Past Quarter
Strong top-line growth driven by increase in comparable store
sales, productivity improvements, cost savings and lower taxes
proved to be Walmart's strengths in the fourth quarter of fiscal
2013. The company's efforts to return shareholder value through
share buyback also fueled earnings.
Walmart's fourth quarter earnings of $1.67 per share exceeded
the prior-year earnings by 10.6%. Net sales surpassed the
prior-year quarter figure on the back of positive same store
sales growth. The company also made efforts to reduce operating
expenses. In addition, the company has strong international
presence and has been expanding its e-commerce business.
Our proven model does not conclusively show that Walmart is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive earnings Expected Surprise
Prediction (ESP) (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank #1, #2 or #3 for this to happen. That is not
the case here as shown below.
The Earnings ESP is 0.00%.
Zacks Rank #3 (Hold):
Walmart's Zacks Rank #3 lowers the predictive power of ESP
because the Zacks Rank #3 when combined with an ESP of 0.00%
makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and #5 (Sell
rated stocks) going into the earnings announcement, especially
when the company is seeing negative estimate revisions
Other Stocks to Consider
Here are some other companies in the retail and wholesale
sector that can be considered as our model shows they have the
right combination of elements to post an earnings beat this
Harris Teeter Supermarkets Inc
), Earnings ESP of +1.47% and Zacks Rank #2 (Buy).
Costco Wholesale Corporation
), Earnings ESP of +1.96% and Zacks Rank #2 (Buy).
), Earnings ESP of +5.26% and Zacks Rank #3 (Hold).
COSTCO WHOLE CP (COST): Free Stock Analysis
HARRIS TEETER (HTSI): Free Stock Analysis
SAKS INC (SKS): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis
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