On Tuesday, Goldman Sachs (NYSE:GS) maintained its positive stance on Walmart (NYSE:WMT), reiterating a Buy rating and an $81.00 price target for the retail giant's shares. The firm's analysis followed Walmart's third quarter 2024 financial results, which surpassed expectations with an adjusted earnings per share (EPS) of $0.58. This figure outperformed the Goldman Sachs and consensus Refinitiv predictions, both of which were set at $0.53.
Walmart's U.S. same-store sales (SSS) saw a notable increase of 5.3%, exceeding the consensus estimate of 3.9%. The growth was attributed to a rise in customer traffic, up by 3.1%, and an average ticket increase of 2.1%. The grocery segment experienced a mid-single-digit uptick, bolstered by higher transaction numbers and unit sales, alongside an inflation rate of approximately 100 basis points. The health and wellness category reported a mid-teen growth rate, fueled by a higher prescription count and a shift towards branded products over generics, in addition to a rise in over-the-counter sales.
General merchandise also showed positive momentum with a low-single-digit increase, driven by product novelty and mid-single-digit unit growth. Notable performance was seen in hardlines, home, and toys, with Walmart continuing to gain market share across various income groups.
The company's e-commerce and advertising revenues demonstrated robust growth both globally and in the U.S. market. Global and U.S. e-commerce net sales grew by 27% and 22%, respectively, compared to 21% and 22% in the second quarter. Similarly, global and U.S. advertising revenues increased by 28% and 26%, respectively, building on the previous quarter's growth of 26% and 30%.
In other recent news, Walmart has demonstrated strong financial performance in the third quarter of fiscal year 2025, leading to increased full-year sales, earnings before interest and taxes (EBIT), and earnings per share (EPS) growth forecasts. Stifel maintained a Hold rating on Walmart shares, while Piper Sandler raised the company's price target to $93, maintaining an Overweight rating. Both firms highlighted Walmart's strong operating momentum, with Stifel attributing it to market share gains across most of its business segments.
In addition, Walmart is increasingly leveraging weather analytics to mitigate the unpredictable influence of weather on shopping trends. The company has adjusted pricing and inventory planning based on these data-driven insights. Furthermore, Walmart, along with other major US retailers, has reduced its imports of holiday products, reflecting a cautious approach to the upcoming holiday season.
Retailers are also turning to advanced weather analytics to adapt to climate change and its impact on shopping trends. Walmart, for instance, adjusted sunscreen prices earlier than usual in certain U.S. regions due to forecasts of a wetter autumn. The application of weather analytics is not limited to inventory planning but extends to promotional scheduling and local advertising.
Finally, Walmart has significantly reduced its imports of Christmas-related products for the upcoming holiday season. The move is part of a broader trend among US retailers, reflecting a conservative approach to avoid overstock and align inventory with anticipated consumer demand.
InvestingPro Insights
Walmart's strong performance, as highlighted in Goldman Sachs' analysis, is further supported by recent InvestingPro data and tips. The company's market cap stands at an impressive $675.86 billion, reflecting its dominant position in the retail sector. An InvestingPro Tip notes that Walmart is a "Prominent player in the Consumer Staples Distribution & Retail industry," which aligns with the robust same-store sales growth and market share gains mentioned in the article.
The company's financial health is underscored by its revenue of $665.03 billion in the last twelve months, with a revenue growth of 5.43%. This growth is consistent with the positive same-store sales and e-commerce performance detailed in the article. Additionally, an InvestingPro Tip reveals that Walmart "Has raised its dividend for 29 consecutive years," demonstrating long-term financial stability and shareholder value creation.
Investors should note that Walmart is currently trading near its 52-week high, with a year-to-date price total return of 61.56%. This strong market performance correlates with the company's better-than-expected earnings and sales growth. For those seeking more comprehensive analysis, InvestingPro offers 13 additional tips on Walmart, providing deeper insights into the company's financial position and market outlook.
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