ETFs to Watch as Walmart Looks Poised to Beat on Q4 Earnings
The world’s largest brick-and-mortar retailer — Walmart WMT — is scheduled to report its fourth-quarter fiscal 2025 results on Feb. 20, before market open. Let’s take a closer look at its fundamentals ahead of the earnings release.
Walmart has gained 23.4% over the past three months, outperforming the Zacks industry average growth of 15.1%. The outperformance is likely to continue given that Walmart has higher chances of beating earnings estimates (read: Retail ETFs in Focus Ahead of Big-Box Q4 Earnings).
This has put ETFs having a substantial allocation to the retailer like Consumer Staples Select Sector SPDR Fund XLP, Vanguard Consumer Staples ETF VDC, Fidelity MSCI Consumer Staples Index ETF FSTA, VanEck Vectors Retail ETF RTH and iShares Evolved U.S. Discretionary Spending ETF IEDI in focus ahead of its quarterly earnings.
Walmart has an Earnings ESP of +2.15% and a Zacks Rank #2 (Buy). According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The retailer saw no earnings estimate revision over the past 30 days for the to-be-reported quarter. The Zacks Consensus Estimate for the fiscal fourth quarter indicates substantial year-over-year growth of 6.7% in earnings and 3.3% in revenues. The company’s earnings track record is robust. It delivered a four-quarter average earnings surprise of 9.25%.
Walmart relies more on groceries and essential products, which tend to maintain stable demand throughout economic cycles. Its value-driven approach and well-executed digital strategy have helped the retailer capture more grocery market share, particularly by attracting higher-income households.
Despite this shift, Walmart still has significant exposure to lower-income consumers, many of whom remain under financial strain due to persistent inflation. However, the company has successfully offset this weakness by drawing in more affluent shoppers through its efficient digital offerings.
Beyond attracting higher-income consumers, Walmart’s expanding e-commerce business is also unlocking new revenue streams. Its digital platform supports higher-margin opportunities such as advertising and third-party fulfillment, further strengthening its long-term growth prospects.
Analysts are bullish on Walmart, with an average brokerage recommendation (ABR) of 1.25 made by 38 brokerage firms. Out of them, 31 are Strong Buy and four are Buy. Strong Buy and Buy, respectively, account for 81.58% and 10.53% of all recommendations. The average price target for Walmart comes to $103.11, ranging from a low of $80.00 to a high of $120.00.
Several analysts have lifted their price target on Walmart ahead of earnings, citing expectations of market share gains and outperformance. Morgan Stanley and Deutsche Bank analysts each recently lifted their price target to $115, while analysts from JPMorgan and Bank of America lifted their targets to $112 and $120, respectively.
On its last earnings call, the mega-retailer lifted its fiscal 2025 guidance. It expects revenues to increase 4.8-5.1% compared with the previously mentioned 3.75-4.75% rise. The company anticipates earnings per share of $2.42-$2.47, up from the prior stated $2.35-$2.43.
Consumer Staples Select Sector SPDR Fund (XLP)
Consumer Staples Select Sector SPDR Fund targets the broad consumer staples space and follows the Consumer Staples Select Sector Index. It holds about 38 securities in its basket, with Walmart taking the second spot at 10.8%. XLP has the largest allocation in consumer staples distribution & retail at 32.6%, while household products, beverages, and food products account for a double-digit allocation each. Consumer Staples Select Sector SPDR Fund is the most popular consumer staples ETF with AUM of $17 billion and an average daily volume of 9 million shares. XLP charges 8 bps in fees per year and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: 4 Safe ETFs to Play as Tariff Tensions Heat Up).
Vanguard Consumer Staples ETF (VDC)
Vanguard Consumer Staples ETF also targets the broad consumer staples space by tracking the MSCI US Investable Market Consumer Staples 25/50 Index. It holds 103 stocks in its basket, with Walmart occupying the second position, with a 13.6% allocation. Vanguard Consumer Staples ETF manages a $7.4 billion asset base and charges a fee of 9 bps per year. VDC trades in a good average volume of around 108,000 shares per day and has a Zacks ETF Rank #3 with a Medium risk outlook.
Fidelity MSCI Consumer Staples Index ETF (FSTA)
Fidelity MSCI Consumer Staples Index ETF offers broad exposure to the consumer staples sector by tracking the MSCI USA IMI Consumer Staples Index and holds 105 stocks in its basket. Of these, Walmart takes the top spot with a 13.5% share. Fidelity MSCI Consumer Staples Index ETF has amassed $1.3 billion in its asset base while trading in a good volume of around 119,000 shares a day, on average. FSTA charges 8 bps in annual fees from investors and has a Zacks ETF Rank #3 with a Medium risk outlook (see: all Consumer Staples ETFs here).
VanEck Vectors Retail ETF (RTH)
VanEck Vectors Retail ETF provides exposure to the 26 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. Walmart takes the second spot with a 9.4% share. VanEck Vectors Retail ETF has amassed $242.3 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 5,000 shares a day on average. VanEck Vectors Retail ETF has a Zacks ETF Rank #3 with a Medium risk outlook.
iShares U.S. Consumer Focused ETF (IEDI)
iShares U.S. Consumer Focused ETF is an actively managed ETF that provides exposure to U.S. companies with a focus on consumer spending and consumer goods. It holds 178 stocks in its basket, with Walmart occupying the fourth position at 8.7% share. iShares U.S. Consumer Focused ETF has accumulated $34.4 million in its asset base and charges 18 bps in fees per year. Volume is paltry for IEDI as it exchanges 6,000 shares a day, on average.
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