Wal-Mart Earnings Preview: International Growth In Focus

-3.87%
Downside
91.31
Market
87.77
Trefis
WMT: Walmart logo
WMT
Walmart

Wal-Mart (NYSE:WMT), the world’s largest retailer, is set to announce its Q2 fiscal 2013 earnings on August 16. Last quarter, it reported net sales growth of 8.6% to $112 billion over Q1 2012. Wal-Mart’s international operations have been a major growth driver for the retailer due to the slowdown of the U.S. economy. Investors and analysts will closely watch for any updates on Wal-Mart’s international growth plans.

According to the guidance provided by Wal-Mart last quarter, it expects Q2 diluted earnings per share from continuing operations to range between $1.13 and $1.18 compared to $1.09 recorded for the same period last year. We will also be closely following Wal-Mart’s earnings guidance for the next quarter and updates on capex and expansion plans for the rest of the year .

We have a $76 price estimate for Wal-Mart’s stock, implying a premium to the current market price.

Relevant Articles
  1. Up 32% Since Beginning of This Year, Will Walmart’s Strong Run Continue Following Q2 Results?
  2. Up 15% This Year, Will Walmart Stock Rally Further After Q1 Results?
  3. Where Is Walmart Stock Headed Post Stock Split?
  4. Up 7% Already This Year , Where Is Walmart Stock Headed Post Q4 Results?
  5. Up 18% This Year, Will Walmart Stock Continue To Grow Past Q3?
  6. Can Walmart’s Stock Trade Lower Post Q2?

See our full analysis for Wal-Mart

International operations

Crucial to Wal-Mart’s future growth

Wal-Mart’s international operations, which generated approximately 28% of its fiscal 2012 net sales, are crucial for its future growth. The international segment witnessed a robust increase of 29% in net sales between fiscal 2010 and 2012. According to Trefis estimates, the international segment presently contributes approximately 40% to its present valuation. We believe over the coming years, with further expansion plans under way, this proportion could witness an increase.

Focus on organic growth

Wal-Mart plans to focus on its existing international operations rather than scouting new regions for growth. The majority of future growth at Wal-Mart is expected to come from China and Brazil. The company is focusing on improving returns from its existing operations. We will be interested to see an update on Wal-Mart’s international growth strategies and focus areas for the coming year.

Online initiatives

With growing online competition and the increasing problem of showrooming, brick and mortar retailers like Wal-Mart are focusing on boosting their online sales. Investors and analysts will be interested to know about Wal-Mart’s future initiatives in this regard in order to fend off increasing online competition.

Understand How a Company’s Products Impact its Stock Price at Trefis