Walmart pops after smashing earnings expectations; Target and Costco also rally
Justin Sullivan

Walmart (NYSE:WMT) jumped in premarket trading on Tuesday after topping estimates with its Q3 earnings report and boosting full-year profit guidance. Revenue was up 9.8% on a constant currency basis to $152.8B during the quarter.
The retailer reported total U.S. comparable sales rose 8.2% in Q3 to top the consensus estimate for a 6.9% increase. U.S. comparable sales were up 17.4% compared to two years ago. Of note, transactions were up 2.1% during the quarter and average ticket rose 6.0%. Comparable sales rose 10.0% at Sam's Club locations in the U.S. off transaction growth of 4.8%. Walmart International saw total sales increase 7.1% to $25.3B.
Notably, the Bentonville giant noted share gains in the U.S. grocery market during the quarter and an improvement in its inventory position.
Consolidated gross profit rate declined 89 basis points, primarily due to markdowns and mix of sales in the U.S., an inflation-related LIFO charge at Samâs Club, and the timing of Flipkartâs annual event, The Big Billion Days.
Adjusted operating expenses as a percentage of sales decreased 75 basis points, primarily due to strong sales growth and lower COVID-related costs.
Investors are likely to latch on to the new $20B share buyback plan announced by Walmart (WMT).
CEO update: "We had a good quarter with strong top-line growth globally led by Walmart and Samâs Club U.S., along with Flipkart and Walmex. Walmart U.S. continued to gain market share in grocery, helped by unit growth in our food business. We significantly improved our inventory position in Q3, and weâll continue to make progress as we end the year."
Looking ahead, Walmart (WMT) expects full-year consolidated net sales growth of about 5.5% vs. consensus growth of 5.06%; excluding divestitures, consolidated net sales growth of about 6.5%; Walmart U.S. comp sales growth, excluding fuel, of about 5.5%; consolidated adjusted operating income decline of 6.5% to 7.5%, which marked an improvement from the companyâs prior guidance of a decline of 9.0%.
Seeking Alpha author Ahan Vashi broke down the WMT print, saying the strong Q3 results prove that the retail bellwether is clearly benefitting from a shift in consumer spending mix amid inflationary pressures.
Vashi: "At the heart of these stunning results is Walmart's grocery business, where comp sales grew in the mid-teens. Walmart is winning market share at a time when consumers are hurting due to high inflation. If a recession materializes in the coming quarters, then the trade-down among consumers should continue to boost Walmart. At ~21x forward PE, Walmart is an attractive defensive stock." 
Shares of Walmart (WMT) rose 7.14% premarket on Tuesday to $147.92. Target (NYSE:TGT) was up 3.37% and Costco (NASDAQ:COST) showed a 2.18% gain.
Compare financial metrics on Walmart, Target and Costco side by side.