Walmart is expected to report solid fourth-quarter results this week but offer conservative guidance for its current fiscal year, according to Evercore ISI analysts. The retail giant is scheduled to release quarterly returns before the opening bell on Wall Street Thursday, with analysts projecting annual earnings guidance of $2.80-$2.90 per share, which would fall 3%-5% below consensus estimates.

While Walmart continues winning profitable market share and driving positive traffic, management historically tends toward conservative initial guidance for the year ahead. The analysts noted that with Walmart shares near all-time highs, sentiment remains largely positive but sets a high bar for the company to meet. They added Walmart to their "tactical, action and positioning" underperform list ahead of earnings, citing concerns about valuation.

The guidance outlook comes as investors closely watch consumer spending trends, which are crucial to overall U.S. economic growth. Walmart's lower prices for essential items have boosted sales among inflation-hit customers, making its earnings report particularly significant for gauging the state of the American economy during the crucial holiday shopping season.