Earnings: What’s in Store for Walmart, Sam’s Club, E-Commerce?

Walmart, one of the nation’s largest retailers, is expected to open Q4 books Tuesday, Feb 20 before the session starts.

https://tickertapecdn.tdameritrade.com/assets/images/pages/md/Shopping carts: Walmart earnings preview
3 min read

It’s a short week with the President’s Day holiday on Monday, but earnings continue on Tuesday, with some of the biggest U.S. retailers on parade. Among the biggest of them all, Walmart Inc. (WMT), is expected to open its books Tuesday, before the session starts.

Like many blue-chip firms, WMT is expected by some analysts to benefit from the tax cut enacted late last year. Goldman Sachs recently upgraded WMT stock to buy from neutral.

According to some analysts, strong sales across business segments and channels are expected to boost Walmart’s bottom line. The company said that store traffic has improved, and favorable currency trends also could help juice the bottom line.

However, many analysts also said that Walmart’s earnings per share growth rates might be strained by its value pricing initiatives to drive store traffic, an adverse mix of products, and continued investments in growth initiatives, including its investments into e-commerce.

WMT stock has appreciated over the last year, up more than 62% when it hit a record-high of $109.98 before the stock market pullback. Last week, WMT stock appeared to be in recovery mode, rising to $103.23 at Thursday’s close. See figure 1 below.

WMT, 12m, Feb 2018


WMT, still in the ranks of the largest U.S. retailers, has forged ahead amid growing e-commerce competition. And while many retailers’ shares have suffered, WMT has thrived, up more than 62% when it hit a record high before the recent correction. It appears to be back in recovery mode. Data source: Standard & Poor’s. Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.

The E-Commerce Shift

The bricks-and-mortar side of the retail industry overall is still shaking itself out as consumer shopping habits change and many shoppers purchase a growing number of retail goods online. WMT has made a number of moves in recent years to ramp up its e-commerce operations, the biggest of which was its $3.3 billion acquisition of Jet.com in late 2016 which it's still integrating into its entire online operations.

Just last week, WMT's Sam’s Club division announced that it would offer free shipping to its “Plus” members as it faces increasing competition from Amazon Prime (AMZN) and Costco (COST). That followed January’s decision to shutter 63 Sam’s stores in 24 states, transforming some of them into distribution centers, according to the company. 

Also, last week WMT continued its labor cost-cutting moves of the last couple years by eliminating two department manager positions in some of its 4,700 U.S. stores. Since 2015, the retailer has upped wages for employees while shifting and eliminating other positions, including corporate-level jobs, to shore up labor costs, according to the Wall Street Journal. “Retail is changing rapidly and over the past two years, we’ve been transforming too,” a Walmart spokesman told the Journal. “That means creating new roles while consolidating and redesigning others.”

The company has also said that it wants to free up capital for further investment into e-commerce strategies. In Q3, WMT said its U.S. e-commerce sales grew 50%. WMT U.S. same-store sales, a key industry metric of stores open longer than a year, rose by 2.7% while Sam’s Club’s comparable-store sales climbed 2.8%.

Walmart Earnings and Options Trading Activity

The retailer also said on the Q3 conference call that Q4 comp sales were expected to increase from 1.5% to 2% “on more difficult compares.” It raised its full-year adjusted earnings per-share projection to a range of $4.38 to $4.46 from $4.30 to $4.40.

The Q4 consensus earnings estimate from third-party Wall Street analysts is $1.36 a share, according to the Earnings Analysis tab on the thinkorswim® platform from TD Ameritrade. WMT has outpaced analysts’ expectations for nine straight quarters. Revenue is projected to rise slightly more than 3% to $135.03 billion from $130.93 billion a year ago.

The options market has priced in an expected share price move of 2.6% in either direction around the earnings release, according to options data on the thinkorswim® platform.

Call activity has been higher at the 110-strike while put activity is concentrated at the 101-strike. The implied volatility sits at the 66th percentile. (Please remember past performance is no guarantee of future results.)

Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a set period of time. Put options represent the right, but not the obligation, to sell the underlying security at a predetermined price over a set period of time.

Call Us

TD Ameritrade and all third parties mentioned are separate and unaffiliated companies, and are not responsible for each other’s policies or services.

Inclusion of specific security names in this commentary does not constitute a recommendation from TD Ameritrade to buy, sell, or hold.


Market volatility, volume, and system availability may delay account access and trade executions.

Past performance of a security or strategy does not guarantee future results or success.

Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.

Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.

The information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.

This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.

TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2018 TD Ameritrade.

Scroll to Top