• Walmart is set to report earnings before the opening on Tuesday.
  • WMT stock slumped in July as it cut guidance.
  • WMT stock is following the market higher, but will earnings stop the rally?

Update: Walmart (WMT) stock is higher after what is largely relief. Earnings were ahead of expectations and guidance was crucially maintained for the rest of the year. EPS was $1.77 versus the consensus of $1.60. Revenue was $152.6 billion versus a consensus of $150 billion. More importantly, Walmart maintained guidance for the next quarter and the remainder of its fiscal year. This has led to a relief rally with WMT stock up 3% in the premarket. 

Walmart (WMT) is set to report earnings on Tuesday before the market opens in what will be a closely watched release. Walmart's stock has rallied in line with the broader market and currently is up for the past seven consecutive sessions. 

Also readWalmart Deep Dive Analysis: Hold WMT to play defense vs upcoming US recession

Walmart stock news

Walmart set off a massive retail meltdown last quarter when it and Target (TGT) missed on earnings and warned about inflationary impacts. Walmart (WMT) doubled down on this as recently as July 26 when it slashed guidance for Q2. WMT stock fell 8% on July 26 after it cut forecasts not only for this quarter but for the full year as its struggles with inventory overhang amid a slump in demand.

The key question is, has Walmart properly undercut expectations this time out to get ahead of the bad news? Certainly, on a macro level, things should be slightly more promising as the recent jobs report and supposed cooling CPI figures demonstrate. Walmart is more boots on the ground though and is in direct contact with the consumer, so this is nearly a bigger economic indicator than any employment report or CPI print.

Walmart does not sit passively – it reacts aggressively to any hiccup. This earnings release has already been flagged to be a bad one. Management cut forecasts just three weeks ago, so presumably, they had more or less total visibility on what they were doing. In effect then these earnings should show little divergence from expectations, but guidance will be the key. Walmart stock has already anticipated this and rallied, as mentioned, quite sharply. This means the risk-reward is not there, and if anything the trade now is slightly short into numbers.

Walmart stock forecast

We have been doing our deep dive analysis on a select few stocks for the past number of months. Recently, we ran through our 12-month price target for Walmart and came up with a HOLD rating and a price target of $121. We will update our model post earnings.

WMT stock has a lot of resistance at $134 on the hourly chart. Failure here will see a quick move back to $120. WMT share price is also flagging as overbought on the RSI and MFI on the hourly chart. 

WMT stock chart

WMT chart, hourly

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