Walmart Delivers; Shares Fully Valued

We do not plan to make a large change to our $96 per share valuation for wide-moat

Year-to-date sales rose 3% against a 4.2% operating margin. In addition to strong domestic performance, ongoing strength in Mexico (which saw 6.3% quarterly comparable sales growth) highlighted results for Walmart's international operations, which accounted for about a quarter of fiscal 2018 sales. Management revised its adjusted EPS guidance to $4.75 to $4.85 from $4.65 to $4.80, against our $4.88 expectation.

Third-quarter comparable sales (excluding fuel) at Walmart U.S., which accounted for roughly 65% of fiscal 2018 sales, rose 3.4%, with balanced ticket (2.2%) and traffic (1.2%) growth. Expansion came on top of hurricane-related sales momentum in the same period last year, which we believe highlights the strength of the results and is consistent with the generally favorable recent marks posted by retailers in the American market. We believe the firm's rapidly growing digital offerings should continue to lift the segment (e-commerce contributed about 140 basis points to Walmart U.S.'s comparable sales growth); it added around 300 grocery pickup locations in the quarter and now delivers from 600 stores, up from around 320 at the end of the second quarter. We believe Walmart's competitive advantages should enable a leading omnichannel experience, underpinning our low-single-digit segment top-line expansion expectations over the next decade despite an ongoing need to keep prices low.

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