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Wal-Mart earnings: Some analysts say traffic has fallen, others say it has grown
MARKETWATCH 2:08 PM ET 8/15/2017
Symbol Last Price Change
WMT 81.02up +0.32 (+0.4%)
QUOTES AS OF 02:17:11 PM ET 08/15/2017
Dueling proprietary analyses come to different conclusions about second-quarter traffic

Wal-Mart Stores Inc. (WMT) is expected to report second-quarter earnings on Thursday before the market opens.

While Cowen & Company analysts say the retail giant has momentum, its latest Consumer Tracker analysis found a decline in unique visitors, with 79.9% of respondents saying they'd visited a Wal-Mart(WMT) store or the website during the May through July period. That's down from 81.2% last year.

Cowen notes that this analysis doesn't account for frequency of visits.

The Consumer Tracker also showed a dip in satisfaction rates, with declines in all categories including customer service, merchandise selection and prices.

Still, in a head-to-head, Cowen analysts prefer Wal-Mart(WMT) to Target Corp. (TGT) , despite improvements at Target.

"[M]anagement has demonstrated an expert ability in merging bricks-and-clicks and leveraging its 4,700 store base while expanding and innovating its ecomm platform," Cowen analysts led by Oliver Chen, wrote in a note last week. "Also, we view improving food-at-home CPI [Consumer Price Index], with deflation easing to -0.1% year-over-year in June as a positive catalyst for Wal-Mart(WMT) given grocery is 56% of sales mix."

Cowen rates Wal-Mart(WMT) outperform with an $86 price target.

Read:Macy's could be in for a 'holiday battle,' analysts say (http://www.marketwatch.com/story/macys-could-be-in-for- a-holiday-battle-analysts-say-2017-08-11)

Also:Target earnings: Private labels are working, but food is still a weak spot (http://www.marketwatch.com/story/ target-earnings-private-labels-are-working-but-food-is-still-a-weak-spot-2017-08-14)

KeyBanc Capital Markets analysts are more bullish about Wal-Mart's(WMT) earnings prospects, calling the retailer "one of our favorite names in our coverage." Its own Key First Look data showed continued traffic strength in the second quarter, projecting that same-store sales will exceed the company's guidance of 1.5% to 2% growth.

The FactSet consensus for domestic same-store sales is 1.9%.

KeyBanc rates Wal-Mart(WMT) shares overweight with a $90 price target.

Wal-Mart (WMT) has an average overweight rating, and average price target of $82.33, according to 32 analysts polled by FactSet.

See also: Retail sales expected to show rare glimmer in July after devastating run (http://www.marketwatch.com/story/ retail-sales-expected-to-show-rare-glimmer-in-july-after-devastating-run-2017-08-13)

Here are some things to watch for:

Earnings: Wal-Mart(WMT) is expected to report earnings of $1.07, in line with last year's result.

Estimize, a software platform that crowdsources estimates from buy-side analysts, hedge-fund managers and others, is expecting EPS of $1.07.

Revenue: FactSet expects sales of $122.8 billion, up from $120.9 billion last year.

Estimize expects revenue of $123.0 billion.

Stock reaction: Wal-Mart(WMT) shares are up 6.1% for the last three months, and up 17.1% for the year so far. The SPDR S&P Retail ETF (XRT) is down 12.2% for the year-to-date, and the S&P 500 index is up 10.1% for the period.

Don't miss:Kohl's gets a boost from selling more things people want to buy (http://www.marketwatch.com/story/kohls- gets-a-boost-from-selling-more-things-people-want-to-buy-2017-08-10)

Read also:Amazon says new accounting rule will change when it recognizes sales of its devices (http:// www.marketwatch.com/story/amazon-says-new-accounting-rule-will-change-when-it-recognizes-sales-of-its-devices-2017-08- 11)

What to watch for:

-KeyBanc analysts led by Edward Yruma cite Wal-Mart's(WMT) advertising business, one "that is very similar to Amazon's," as an "underappreciated growth opportunity."

-In an effort to challenge Amazon (AMZN) online, Wal-Mart(WMT) has announced a number of e-commerce acquisitions, including Bonobos and ModCloth. MKM Partners believes Birchbox could be the next purchase (http://www.marketwatch.com/ story/birchbox-in-acquisition-talks-with-a-number-of-retailers-including-wal-mart-recode-2017-08-09).

"While these small acquisitions are immaterial to the overall P&L, they give Wal-Mart(WMT) access to some of the best intellectual capital in retail today in our view and demonstrate the company's determination to be an e-commerce leader/ innovator," MKM wrote in a Monday note.

MKM analysts rate Wal-Mart(WMT) stock neutral.

-Tonya Garcia; 415-439-6400; [e-mail]


(END) Dow Jones Newswires
08-15-171408ET
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