If you are looking for a stock that has a history of consistently beating earnings estimates and is in a good position to maintain the trend in its next quarterly report, consider Walmart (WMT). This company in the Zacks Retail – Supermarkets industry has the potential to beat its earnings estimate again.
This world’s largest retailer has beaten earnings estimates in a number of quarters, especially when looking at the previous two reports. The average surprise rate over the last two quarters was 12.24%.
For the last quarter, Walmart earnings were expected to be $0.52 per share, but instead it reported $0.60 per share, representing a surprise of 15.38%. For the previous quarter, the consensus estimate was $0.55 per share, while it actually came in at $0.60 per share, representing a surprise of 9.09%.
Thanks in part to this development, there has been a positive change in earnings estimates for Walmart recently. In fact, the Zacks Earnings ESP (Expected Surprise Prediction) for the stock is positive, which is a great indicator of an above-expectation earnings outlook, especially when combined with the solid Zacks Rank.
Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better deliver a positive surprise nearly 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat the consensus estimate could be as many as seven.
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a version of the Zacks Consensus, whose definition refers to change. The idea is that analysts who revise their estimates just before earnings are released have the latest information that may be more accurate than what they and others contributing to the consensus had previously predicted.
Walmart currently has an Earnings ESP of +1.06%, which suggests that analysts have recently become optimistic about the company’s earnings prospects. This positive Earnings ESP, combined with the stock’s Zacks Rank #2 (Buy), suggests that further success may be in store. We expect the company’s next earnings report to be released on August 15, 2024.
When it comes to the Earnings ESP metric, it is important to note that a negative value reduces the predictive power; however, a negative Earnings ESP does not mean that profits were not achieved.
Many companies end up beating consensus earnings per share estimates, although that is not the only reason for the price increase. In addition, some stocks can remain stable even if they end up missing the consensus estimate.
This is why it’s really important to check a company’s Earnings ESP before its quarterly earnings release to increase your chances of success. Be sure to use our Earnings ESP filter to find the best stocks to buy or sell before they’re released.
Want the latest recommendations from Zacks Investment Research? Download the 7 best stocks for the next 30 days today. Click here to get this free report
Walmart Inc. (WMT): Free Stock Analysis Report
To read this article on Zacks.com, click here.
Zacks Investment Research
