What to expect from Walmart and Home Depot earnings next week?

As Walmart Inc (NYSE: WMT) and Home Depot Inc (NYSE: HD) prepare to report their quarterly earnings next week, UBS analyst Michael Lasser anticipates mixed signals from the retail giants. 

While Home Depot is expected to issue conservative guidance, Walmart’s performance is projected to be stronger, reflecting its recent strategic initiatives.

Home Depot: Conservative outlook but long-term potential

Home Depot is scheduled to announce its earnings on August 13. 

Lasser predicts the home improvement retailer will maintain its conservative approach, reflecting a cautious but stable outlook for the short term. 

Despite this, he believes Home Depot is well-positioned for future growth.

Currently, Home Depot’s stock is roughly flat for the year, signalling a period of stagnation. 

However, Lasser remains optimistic about the company’s long-term prospects. 

His positive outlook is grounded in Home Depot’s strong market position and resilience in the consumer sector, making it a solid investment choice despite the expected muted guidance.

Walmart: Strong performance and future optimism

In contrast, Walmart will release its earnings report on August 15th, with analysts forecasting a strong performance. 

The consensus estimate for Walmart’s Q2 earnings is 65 cents per share, adjusted, on revenue of $168.5 billion. 

This represents a 5.0% increase in earnings and a 4.0% rise in revenue year-over-year.

In the previous quarter, Walmart earned 60 cents per share on $161.5 billion in revenue. 

The company’s management has indicated that it expects to meet or exceed its previous guidance, contributing to a positive outlook. 

Lasser, in his recent CNBC interview, highlighted Walmart’s growth potential, particularly praising the company’s ventures into advertising.

Lasser sees a significant upside for Walmart’s stock, projecting a target price of $74. 

He emphasized Walmart’s ability to leverage its extensive consumer data and advertising revenue, which added $3.4 billion to the company’s bottom line last year. 

Given that advertising is a high-margin business, this segment is expected to bolster Walmart’s financial performance over the long term.

Despite the expected conservative guidance from Home Depot, Lasser remains bullish on the company. 

He views Home Depot as a strong investment option for those seeking exposure to the consumer sector. 

UBS has set a $400 price target for Home Depot’s stock, indicating a potential 14% upside. 

The forecasted earnings of $4.59 per share represent a 1.3% year-over-year decline, while revenue is expected to be $42.6 billion, down 0.8% from the previous year.

Overall, both Walmart and Home Depot are expected to navigate the upcoming earnings season with differing strategies. 

Walmart’s proactive measures and robust performance contrast with Home Depot’s cautious stance, yet both companies are poised to impact the retail sector significantly.