Walmart Inc "Here’s the Scoop on Expectations for WMT’s 1Q" (Buy) Lasser

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Walmart Inc "Here’s the Scoop on Expectations for WMT’s 1Q" (Buy) Lasser

Q1E 0.66 0.66

caution is that we estimate that higher gas prices had a modest impact in 1Q, likely Q2E 0.75 0.75

Q3E 0.66 0.68

pressuring EBIT by ~10 bps. Looking forward, higher energy costs could add

Q4E 0.81 0.82

$200mm to WMT’s quarterly expenses if the price of a barrel of oil remains at the

01/27E 2.88 2.91

recent level. So, this is a bit of a wildcard.

01/28E 3.70 3.28

01/29E 4.30 3.72

Together, these pieces should be well received by the market. Admittedly, the stock’s

premium valuation has become the most contentious part of the debate recently. But, Michael Lasser

this quarter is unlikely to be a catalyst for a meaningful downward re-rating. Thus, we Analyst

think WMT’s shares should remain a core holding. Amidst a challenging backdrop for michael.lasser@ubs.com

retailers, we anticipate WMT will continue to set the bar for the rest of the industry. +1-212-713 2440

Joshua Bluestine

Beyond the headlines, the investment debate continues to revolve around whether Analyst

joshua.bluestine@ubs.comWMT’s long-term opportunity to scale its 2nd P&L justifies its valuation. From our

+1-212-713 1297

perspective, the company appears increasingly well-positioned to do so in the current

environment. It continues to gain traction with higher-income consumers, supported by Mark Carden

merchandising improvements, an expanded selection in its 3P marketplace, and Analyst

mark.carden@ubs.comongoing trade-in behavior. At the same time, WMT looks poised to sustain its price

+1-212-713 3218

leadership while other retailers may be forced to pass through higher input costs. This

should drive further share gains. Importantly, returns from its investments in eCommerce

are beginning to inflect.