On Thursday 19 February Walmart is due to post its fourth-quarter figures. The company is expected to post an improved adjusted earnings per share, jumping from $1.15 up to $1.537. The company’s quarterly sales are also due to improve, rising from $119 billion to $132.538 billion. As a consequence, the pre-tax profits will rise from $5.609 billion to $7.662 billion. This should see the year-on-year fourth-quarter pre-tax profits increase by some 12.8%.
Inflation has been an issue that all the major global retailers have had to tackle and, as such, the institutional support for the firm is less conclusive than it has been historically. A total of 11 of the institutional analysts have the company as a buy, 20 as a hold and five rate the company as a sell. The uncertainty surrounding global inflation goes some way to explaining the fact that the average twelve-month target for the company is $84.21, a couple of dollars below the current price.
One of the biggest conundrums facing Walmart is how to get more out of China. Even though the company has had a presence for almost two decades the revenue still accounts for only a fraction of its total. With the company announcing job cuts and store closures it appears that a period of focus is planned to tackle some of its problems. Issues surrounding the quality of goods sold, book keeping and the perception that the firm sets lower standards for its Chinese operation than in other countries have all prevented it from getting the most out of the largest country by growth potential.
A decent set of fourth-quarter figures convincing the markets that Walmart has a good handle on dealing with global inflation figures falling should help the shares remain above the 50-day moving average around the $86 level.