SKN | Bank of America Looks Beyond Walmart’s Store Sales Ahead of Earnings

Key Takeaways:

• Bank of America maintained its Buy rating and $144 price target on Walmart ahead of the retailer’s August 20 earnings release.
• The bank expects investors to look beyond U.S. store sales and focus increasingly on Walmart’s higher-margin businesses.
• BofA forecasts adjusted second-quarter earnings of 74 cents per share, compared with 68 cents a year earlier.
• The bank believes softer U.S. sales would have only a limited impact on Walmart’s full-year growth outlook.

Bank of America is taking a broader view of Walmart ahead of the retailer’s second-quarter earnings, arguing that the headline U.S. store-sales figure may not fully capture the factors driving the company’s earnings trajectory. The bank has maintained its Buy rating and $144 price target, despite reducing its forecast for U.S. store-sales growth.

Why Bank of America Is Looking Beyond Walmart’s Core Stores

BofA analyst Christopher Nardone’s assessment centers on a structural change within Walmart’s earnings profile. The retailer has expanded businesses such as advertising and its marketplace operations, creating additional sources of revenue and profitability that have become increasingly relevant to the overall financial picture.

For Bank of America, the composition of growth matters as much as the headline growth rate. A moderation in traditional U.S. store sales does not necessarily translate into a proportionate deterioration in Walmart’s earnings outlook if newer, higher-profit businesses continue to expand.

This distinction is particularly important ahead of earnings, when investors often concentrate heavily on comparable sales. BofA’s analysis suggests that this approach risks overlooking the changing economics of Walmart’s broader business model.

What BofA Expects From Walmart’s Second Quarter

Bank of America forecasts adjusted earnings of 74 cents per share for the second quarter, compared with 68 cents a year earlier. The bank expects U.S. store sales growth of approximately 4.6%, close to the middle of Walmart management’s 4% to 5% constant-currency guidance.

The expected moderation reflects several factors, including the fading impact of tax refunds, less favorable general-merchandise pricing and weaker spending among lower-income consumers.

Yet BofA believes the potential impact should be contained. According to the bank’s analysis, a U.S. store-sales result half a percentage point below expectations would reduce Walmart’s full-year sales-growth outlook by only about one-tenth of a percentage point.

The Banking Perspective: Earnings Quality Matters

For sophisticated investors, BofA’s positioning offers a useful example of how major banks assess large consumer companies. Rather than treating one operating metric as decisive, the bank is examining how different revenue streams contribute to earnings quality and future profitability.

That framework becomes increasingly relevant as Walmart expands beyond traditional retail. Advertising and marketplace activities can carry different margin characteristics from physical-store operations, potentially changing how investors evaluate incremental growth.

What Bank of America Will Be Watching Next

The August 20 earnings release will provide a clearer test of BofA’s thesis. Investors will be watching U.S. sales, but the performance of Walmart’s advertising, marketplace and other higher-margin businesses may offer greater insight into the company’s evolving earnings structure.

For high-net-worth investors, the broader lesson is straightforward: Bank of America is focusing on earnings composition, not simply sales momentum. That distinction could determine whether a softer retail number materially changes the market’s assessment of Walmart.

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