Walmart Stock: Will the Retail Giant Beat Q4 FY2025 Results Expectations?

TradingKey - The biggest retailers have been the ones doing well in this period of higher inflation. It’s no surprise that scale has won out and one of the best retailers at doing things at huge scale is Walmart Inc (NYSE: WMT).

The retailer has perfected the “Big Box” retail strategy and has also managed to meaningfully expand its online presence in recent years to compete with Amazon.com Inc (NASDAQ: AMZN) for the online-oriented consumer.

Indeed, Walmart shares are up 77% in the past year and have risen a whopping 163% in the past five years, easily outperforming S&P 500 Index over both time periods. The company is set to report is Q4 FY2025 earnings (for the three months ending 31 January 2025) on Thursday (20 February) before the market open. 

Here’s what investors should be watching ahead of the earnings release from Walmart.

Beat and raise quarters becoming the norm

For Walmart investors, the retailer has consistently beaten consensus expectations over the past few years as its offerings continues to highlight its gulf in operational excellence and sheer scale versus smaller peers, such as Target Corp (NYSE: TGT).

In its last Q3 FY2025 results in November 2024, Walmart posted revenue of US$169.6 billion – which was up 6.2% year-on-year – and came in ahead of expectations. Meanwhile, earnings per share (EPS) of US$0.58 for the period also beat market expectations for EPS of US$0.53.

Furthermore, the company raised its guidance back in Q3 FY2025 for the full year and expected net sales to grow between 4.8% and 5.1% in FY2025 versus a previous forecast of between 3.7% and 4.75%.

Comparable sales, also known as “same-store sales”, rose an impressive 5.3% in Q3 FY2025 and was an acceleration from the 4.2% comparable sales growth for Q2 FY2025. For Sam’s Club, it’s membership-only warehouse retail chain, saw comparable sales do even better – expanding by 7% (excluding fuel) in Q3 FY2025. 

No doubt, investors will be hoping that comparable sales will be as strong for Walmart and Sam’s Club, if not stronger, than that posted for Q3 FY2025, when the company reports on Thursday. 

E-commerce to continue to be growth driver?

Walmart’s e-commerce business continues to grow at an impressive clip with the firm’s US e-commerce division having seen 22% year-on-year revenue growth in Q3 FY2025. Investors will be monitoring the Q4 FY2025 numbers closely on Thursday to see if Walmart can keep up its strong showing on the e-commerce side.

Walmart US e-commerce sales

Sources: CNBC, company reports

In Q3 FY2025, the gains in e-commerce in the US came from an increase in curbside pickup and home delivery. There was also significant growth from Walmart’s advertising and third-party marketplace businesses, with the company starting to find it’s a key growth driver in the digital space.

Added to that is China, where Walmart seems to be benefitting from weak consumer sentiment and the desire among consumers to tighten their purse strings – with Sam’s Club a particular beneficiary. 

Comparable sales growth in China for Walmart was an impressive 15% in Q3 FY2025 and e-commerce sales growth outperformed the US, notching up 25% year-on-year growth.

How will tariffs impact Walmart?

In terms of market expectations for Walmart’s Q4 FY2025 numbers, the average consensus estimate is for the retail giant to deliver US$180.2 billion in sales, which would be a 4% year-on-year revenue increase.

There have been a few analyst upgrades so far in 2025 for Walmart as fears of trade tariffs mean investors are rotating into quality retailers that have scale. Walmart is obviously one of the biggest out there, along with its main big box competitor Costco Wholesale Corporation (NASDAQ: COST).

According to Walmart CFO David Rainey, around two-thirds of the items that Walmart sell are made, grown or assembled in the US and the company has been proactive in trying to diversify its import sources.

For investors, Walmart has equalled safety in uncertain times and, if more trade tariffs are forthcoming, the stock could continue to outperform the broader market. All eyes will be on Thursday and how the retail giant performs but the signs are pointing towards a positive set of earnings.