KeyBanc on Walmart (WMT): 'Strong Sales Results - Walmart U.S. and Sam’s Comps Beat'

KeyBanc analyst Bradley Thomas reiterated an Overweight rating and $177.00 price target on Walmart (NYSE: WMT)

The analyst comments "Walmart U.S. comps increased 4.9% y/y (or +13.1% on a twoyear stack), above the consensus of +3.4%. U.S. comps growth was driven by 1.5% growth in average ticket and 3.4% growth in transactions (accelerating sequentially from 2.9% in 2Q). Encouragingly, e-Commerce grew 24% y/y (or 40% on a two-year stack), led by strength in pickup & delivery. The results also compare favorably to AMZN’s 3Q NA growth of +11%. During the quarter, Walmart U.S. continued to gain market share in grocery. The grocery share gains are particularly notable, with +MSD comps in grocery vs. grocery industry sales +1.5% in 3Q (and +2.9% YTD) per the Census Bureau, aligning with our views on the Grocery Industry. Sam’s Club comps (ex-fuel) increased 3.8% (or +13.8% on a two-year stack), which was slightly above the Street’s estimate of +3.6% and was driven by 4.0% growth in transactions (accelerating from 2.9% in 2Q), partially offset by a 0.2% decline in average ticket. Membership income increased 7.2%, with record total membership and Plus penetration at quarter end. Walmart International net sales were $28.0B, an increase of 10.8% (or +5.4% on constant-currency basis), negatively impacted by $1.3B from currency fluctuations (vs. the expectations of $1.6B FX tailwinds). Strength in International was led by Walmex and China. Consolidated net sales (excluding membership income) for the quarter were $159.4B, up 5.3% y/y (vs. guidance of ~3.0% growth in constant currency), which was also above our +4.0% estimate and the consensus of +4.4%. Total revenue was $160.8B, +5.2%, or 4.3% in constant currency, driven by strength in Walmart U.S. and International. Inventory declined 1.2% y/y in 3Q (following -5.3% in 2Q, -7.0% in 1Q23, flat in 4Q22, and increases of 32%, 25%, and 13% in 1Q22, 2Q22, and 3Q22, respectively)."

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Shares of Walmart closed at $169.78 yesterday.

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