Wal-Mart Stores, Inc. (NYSE:WMT) is scheduled to report first quarter, fiscal year (FY) 2015 sales and earnings before the opening of financial markets on Thursday, May 15, 2014.
Wall Street anticipates that the retail giant will earn $1.15 per share for the quarter, which is $0.01 more than last year's profit of $1.14 per share. iStock expects WMT to fall short of Wall Street's consensus number, the iEstimate is $1.12.
Revenue, like earnings, is expected to take a small step forward, increasing a slight 1.8% year-over-year (YoY). Wal-Mart's consensus revenue estimate for Q1 is $116.28 billion, a little or a lot more than last year's $114.19 billion, depending on how you look at it.
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Wal-Mart is the nation's largest retail and operates retail stores in various formats globally. The Company operates in three segments: the Walmart U.S., the Walmart International and the Sam's Club.
In the last four quarters, WMT topped estimates twice by a penny and missed twice by a penny. In fact, Wal-Mart's reported earnings-per-share (EPS) have been within plus or minus a penny nine of the last 11 quarterly checkups. Coincidentally, Q1 owns one the two outliers.
Despite earnings generally hugging the consensus estimate, WMT's EPS-driven price-sensitivity has favored red reactions. The stock backpedalled an average of 3.67% in the days surrounding seven of the last 11 earnings reports. Meanwhile, the quartet of gains was limited to an average of 2.69%. The theflyonthewall.com reports, "Walmart May 79 [options] straddle priced for 2% move into Q1 [earnings]."
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Many retailers reported soft revenue and sales so far in 2014 while blaming the polar vortex – see Macy's, Inc. (NYSE:M). However, the Wall Street Journal reports via Internet Retailer research that WMT's online sales growth is rocking and even outpacing Amazon.com, Inc. (NASDAQ:AMZN). So, Thursday's profit report-card is likely to have some good and bad grades.
But in the case of a monster the size of WMT, a penny here or there is going to come down to costs and margins. In 2014, cost of sales increased at the same pace as revenue but operating, selling, general and administrative expenses (SG&A) grew at 3.07% versus 1.6% for total revenue. That might not sound like a big difference, but… the difference is $1.3 billion annually or $0.40 per share had SG&A increased at the same pace as sales.
Overall: Wal-Mart Stores, Inc. (WMT) history, peer results/excuses, and iEstimate suggest earnings will hug the consensus once again with a slight downward bias. The company has enough wiggle room with SG&A to post a small bullish surprise, too.
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