Wal-Mart (WMT) will report first quarter (April) results with management commentary and a presentation at 7:00 tomorrow morning. The largest retailer in the world caters to price-conscious consumers and shed light on consumer spending in the US.

S&P Capital IQ expects Q1 EPS of $1.02 (vs. $1.14) last year with net sales (excluding membership fees) up 2% to $124.5 billion and comps up 3.3%.

The company guided for 2.5-3.0% Wal-Mart US comp growth in discal 2020 after 3.6% growth in FY19 -- the best growth in ten years. Consumer spending was strong last year, helped by tax cuts. Meanwhile, the company is executing well. Ecommerce sales are expected to grow 35% on top of 40% growth last year. The Flipkart acquisition is weighing on earnings near term.

Wal-Mart has guided EPS down low-single digits yr/yr (up low to mid single-digits excluding Flipkart), with net sales growth of at least 3% in constant currency, comp sales growth of 2.5-3.0% for Walmart U.S ex-fuel with eCommerce sales up 35%, +1% for Sam's Club and Walmart International net sales +5% in constant currency. Consolidated Operating Income: Decline by a low single-digit percentage range, including Flipkart; Increase by a low single-digit percentage range, excluding Flipkart.

Retail stocks have underperformed this week as the US threatens to impose tariffs on the remaining $300 bln in Chinese imports not already subject to duties.

Wal-Mart's eCommerce initiatives are paying off, but competition won't be letting up. Earlier this week, Wal-Mart announced next-day delivery with a $35 minimum for 150-200K items. That follows Amazon's announcement last month that Prime two-day shipping will become one-day shipping this year. 

Wal-Mart will host an Investment Community Meeting at the Annual Shareholders' meeting on June 7. 


The compay has a $387 bln market cap and trades at 21x EPS -- the multiple inflated as earnings are weighed down by Flipkart. Wal-Mart trades at a notable premium to Target (TGT) and a notable discount to Costco (COST).