Walmart recovers most of sell-off after tariff talk overshadows earnings beat

Walmart (WMT) stock has gained ground in Thursday's afternoon session after selling off more than 5% in the morning despite delivering an impressive first quarter result before the bell. The globe's largest retailer reported Q1 adjusted earnings per share (EPS) of $0.61, which beat the consensus for $0.58, and revenue of $165.6 billion was more than $2 billion ahead of the $164.4 billion that was expected.

The Dow Jones Industrial Average (DJIA), which features Walmart as one of its 30 holdings, has also recovered territory, edging up 0.4% in the afternoon after losing a similar amount in the morning session. US stocks were buoyed by a Producer Price Index (PPI) report that showed wholesale prices falling more than expected. But that sentiment was somewhat tempered by US Retail Sales for April, arriving up just 0.1% MoM.

Walmart stock news

The highlight for the quarter, which ended in April, was the 22% annual growth in the company's Global eCommerce segment. Additionally, Walmart's international advertising revenues surged 50% from a year earlier.

Comparable sales for the US rose 4.5% YoY, outperforming the consensus estimate of 3.9%. Transactions were 1.6% higher YoY during the quarter, and the average ticket was up 2.8% YoY. However, international sales fell 0.3% from the year prior.

Walmart CEO Doug McMillon told analysts that he is expecting prices to rise at Walmart due to the tariffs, and the company's CFO added to that sentiment.

"We’re wired for everyday low prices, but the magnitude of these [tariff] increases is more than any retailer can absorb," said CFO John David Rainey. "It’s more than any supplier can absorb. And so I’m concerned that consumer is going to start seeing higher prices. You’ll begin to see that, likely toward the tail end of this month, and then certainly much more in June."

Due to the uncertainty surrounding rising supplier prices, Rainey said that Walmart would not be providing EPS and operating income growth guidance for the second quarter, but did say it expects $167.8 billion in Q2 revenue.

For the full year, management expects net sales to rise between 3% and 4% and adjusted operating income to gain between 3.5% and 5.5%.

Walmart stock forecast

Walmart stock recovered most of the sell-off on Thursday, but the risk to the downside looks serious. The post-tariff pullback rally petered out near $100, producing a lower high compared with February's peak above $105. Prior January support at $90 and the 50-day Simple Moving Average (SMA) near $91 make that region look interesting.

However, the 200-day SMA is quickly narrowing its distance with the 50-day counterpart, so its rising tide ($87.41 on Thursday) could spell disaster for the share price soon enough. WMT stock already broke below the 200-day in early April when it hit a six-month low below $80.

WMT stock needs to clear the $100 level convincingly for any bullish excitement to emerge.

WMT daily stock chart