As Walmart Inc. WMT is preparing to release its second-quarter results today. The market is on high alert, waiting for signs of new trends in consumer spending.

What happened: Investors and analysts are watching Walmart closely because any sign of a faster-than-expected decline in consumer spending could potentially roil the shares of other consumer-focused companies.

However, the general mood remains hopeful.

This happened after other major players such as Amazon.com Inc. Amazon And Airbnb Inc. ABNBcited several factors, including global events and new regulations, as reasons for a possible decline in consumer demand.

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Evercore ISI Analyst Greg Melich expects Walmart’s commentary to indicate a stable consumer environment driven by positive footfall and stock gains. Wall Street’s forecast for Walmart’s sales growth is slightly below the peak of the pandemic, but still robust and likely to meet or beat analysts’ expectations.

“Walmart will rely on a stable low- to middle-income consumer environment as well as continued switching from higher-income consumers, with positive customer traffic and market share gains suggesting that commentary will be more constructive as the year progresses,” Melich said, according to Barron’s.

What can you expect from Walmart?

Wall Street expects Walmart to report quarterly earnings of $0.64 per share on revenue of $168.57 billion before the market opens, according to data from Benzinga Pro. Walmart shares rose 0.50% to $69.00 in premarket trading.

Why are analysts so optimistic about Walmart earnings?

Joseph FeldmanAnalyst at Telsey Advisory Group, believes Walmart’s investments in automating its entire supply chain, as well as gains from its fast-growing advertising and fulfillment business, likely contributed to earnings growth.

Third-party data from Placer.ai shows healthy sales growth during the quarter, with visits to Walmart stores and Sam’s Club locations increasing 3.9% and 7.5%, respectively, compared to the same period last year.

“The company differs from the rest of the retail sector in its continued momentum – albeit with some slowdown – against the backdrop of a weakening consumer environment,” said the Deutsche Bank analyst. Krisztina Katai pointed out this.

Why it is important: Walmart’s Q2 earnings are particularly significant given recent developments in the retail sector. Airbnb had recently expected a decline in U.S. bookings due to declining consumer sentiment. The vacation rental company cited global events, including the ongoing Israel war, and new regulations in California.

Similarly, Amazon attributed its lower revenue forecast to the Paris Olympics and the recent assassination attempt on the former president. Donald TrumpAmazon’s chief financial officer, Brian Olsavskysaid consumers were “remaining cautious” and focusing more on purchasing everyday goods, which could explain the revenue shortfall.

These concerns are compounded by the recent slowdown in job creation. July’s slowdown signaled a cooling of labor market conditions and strengthens the case for imminent rate cuts as early as next month.

Price promotion: Walmart shares closed 0.8% higher at $68.66 on Wednesday and were up 0.50% at $69 in premarket trading on Thursday at the time of writing, according to data from Benzinga Pro.

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This content was created in part with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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