Earnings Cheat Sheet: Walmart’s Sales Lag Expectations

Many analysts and investors want to know if the consumer will actually be stronger this holiday season, or if the National Retail Federation’s forecast is a bit lofty. On Tuesday, big box retailer Wal-Mart (WMT) stores issued their third quarter earnings report and the upcoming holiday shopping season still lacks clear direction.

Earnings: Increased 8.4% to $3.44 billion ($0.95 per share) from $3.15 billion ($0.82 per share) year-over-year. Excluding one-time items, WMT earned $.90 per share.

Revenue: Increased 2% to $101.2 billion from $98.7 billion in the same quarter a year ago.

Actual versus Wall Street Expectations: Wal-Mart met Wall Street earnings expectations at $0.90 a share, but missed on revenue expectations of $102.26 billion.

Notable Stats: U.S. same-store sales fell 1.3%.

Wal-Mart ended the third quarter with year-to-date free cash flow of $2.9 billion, compared to $3.6 billion in the prior year.

Raised its full-year forecast to a range of $4.08 per share to $4.12, relative to a previous range of $3.95 per share to $4.05.

Approved a new $15 billion share repurchase program on June 4, 2010, which replaced the previous $15 billion authorization.

Did You Hear That? Mike Duke, Wal-Mart Stores, Inc. President and CEO said. “We were pleased with the ongoing sales momentum at Sam’s Club and expect that momentum to continue in the fourth quarter. Our Walmart U.S. business is on the right track, with third quarter comp sales within guidance and operating income growing faster than sales.”

Commentary: With this week’s pullback in the general markets, WMT shares have dipped below the 50-day moving average for the first time since August, a sign of technical caution in the near-term. The current stock price still remains above the 200-day moving average for now. Target (TGT) could also pose as a competitive threat this holiday season, with an underdog mentality of taking some market share from the gigantic Wal-Mart.

Disclosure: No positions.