Walmart (NYSE: WMT) goes into its earnings report on August 15 with high expectations after the company gained 29% year-to-date. Consensus analyst estimates call for Walmart (WMT) to report revenue of $167.3 billion, earnings per share of $0.65 and comparable sales growth in the U.S. of 3.3%. The general view is that Walmart (WMT) will continue to benefit from ongoing jittery trading activity in global markets as a defensive stock pick, but the retail sector as a whole is eagerly awaiting to hear the pulse of the Bentonville-based retail giant regarding the U.S. consumer.

Morgan Stanley expects another mega quarter for Walmart (WMT) as the company can prove its leadership position in the market ahead of a weaker consumer environment. Analyst Simeon Gutman believes if Walmart (WMT) hits comparable sales forecasts, it will be acceptable for the stock, especially as the rest of retail grows at a slower pace. “Given the weak retail data for July, rising risks of a consumer slowdown, and an upcoming election in the second half of 2024, we think maintaining guidance should be acceptable given these uncertainties,” he stressed.

Oppenheimer analyst Rupesh Parikh is a bit more cautious on Walmart (WMT) numbers. Parikh and his colleagues are more cautious on the development after the recent significant outperformance and in light of Wall Street’s potentially aggressive third-quarter revenue forecasts. “At this point, against the backdrop of currently subdued inflation, we believe management could raise earnings guidance for fiscal 2024 (January 2025) but leave implied full-year constant currency (cc) revenue growth at the high end or slightly above the 3-4% range,” noted Parikh. Oppenheimer believes investors should be positioned to benefit from any profit-taking should it occur, rather than betting on a positive catalyst in upcoming numbers. Walmart (WMT) remains a top pick at Oppenheimer.

On Seeking Alpha, analyst Uttam Dey believes an increased mix of higher-margin digital advertising revenue and membership growth should improve Walmart’s (WMT) margin profile. Dey believes Walmart (WMT) can deliver 9.6% compound annual operating income growth, with margins expanding by about 20 basis points per year on average. However, with expectations clearly high and the market potentially factoring in a Walmart (WMT) forecast that beats expectations and increases expectations, Dey thinks it’s possible the stock could stay range-bound for a few months if Walmart (WMT) issues conservative guidance.

During the earnings call, investors should expect Walmart (WMT) to discuss margin issues for the rest of the year and provide details on its U.S. sales mix, from general merchandise to grocery to health and wellness. Investors will also be watching to see if Walmart (WM) was able to continue its strong global advertising business growth of over 30% in the first quarter.

The options trade implies a 5% share price move after Walmart (WMT) releases its Q2 earnings report. Notably, the stock rose 7% after the Q1 report was released. The retailers with the highest trading correlation to Walmart (WMT) following its earnings report are BJ’s Wholesale Club (BJ), Costco (COST), Ollie’s Bargain Outlet Holdings (OLLI), and Best Buy (BBY). Analysts have also circled grocery retail stocks Albertsons Companies (ACI), Kroger (K), and Sprouts Farmers Market (SFM) as three names that could react to the Walmart (WMT) report. The ETFs with the highest exposure to Walmart (WMT) are Consumer Staples Select Sector SPDR Fund ETF (XLP), Vanguard Consumer Staples Index Fund ETF (VDC), VanEck Retail ETF (RTH), and iShares US Consumer Focused ETF (IEDI).