Wal-Mart Stores, Inc
) is set to report its third-quarter fiscal 2014 results on Nov
14 before the market opens. Last quarter, it posted in-line
results. Let's see how things are shaping up for this
Factors to Consider this Quarter
A sluggish global retail sales environment has been hurting
the retail giant's sales and profits since the past few quarters.
Restrained consumer spending in the U.S., which emanated from the
recent hike in payroll taxes and higher gas prices have been
hurting the top line. Besides higher taxes, weak pay and a tepid
rate of hiring is also curbing consumer spending. We believe the
gloomy consumer spending environment will not improve too much in
the next few quarters. The economic strains in the U.S. and
abroad are likely to pressurize its low-income shoppers for the
rest of the year.
Due to weaker-than-expected performance in the first half of
2014, Walmart sharply lowered its net sales and earnings growth
guidance for fiscal 2014 at the second quarter conference call.
Moreover, the challenging sales environment, inventory concerns
as well as currency headwinds are expected to hurt second half
sales as well.
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
and a Zacks Rank #1, #2 or #3 for this to happen. That is not the
case here as shown below.
Negative Zacks ESP:
The Most Accurate estimate stands at $1.12 per share while the
Zacks Consensus Estimate is higher at $1.13. That is a difference
Zacks Rank #3 (Hold):
Walmart's Zacks Rank #3 (Hold) when combined with a negative ESP
makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #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 that they have
the right combination of elements to post an earnings beat this
Best Buy Inc
), Earnings ESP of +9.09% and a Zacks Rank #1 (Strong Buy).
), Earnings ESP of +1.89% and a Zacks Rank #3 (Hold).
), Earnings ESP of +2.08% and a Zacks Rank #3 (Hold).
BEST BUY (BBY): Free Stock Analysis Report
HHGREGG INC (HGG): Free Stock Analysis Report
KROGER CO (KR): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis
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