Walmart (WMT) is a retail titan, the world's largest private-sector employer. And for a long time the Dow Jones stock was a huge growth winner for investors. Walmart continues to lock horns with online behemoth Amazon.com (AMZN) and is set to post earnings. So is Walmart stock a good buy right now? Read on.
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Walmart has mammoth revenue. It came in at $572.75 billion in fiscal 2022. However, its size is also a weakness, as sales growth was a tepid 2.4%. Achieving substantial growth is difficult for such a large retail company.
Sam Walton founded the company in 1969, but the discount giant isn't resting on its laurels. E-commerce sales have been surging with a strong performance at Walmart.com, including its online groceries. However, the vast majority of its revenue still comes from its brick-and-mortar stores. Meanwhile, Amazon has a foothold in physical retail through its Whole Foods chain.
Walmart Earnings Due
Walmart is getting set to post earnings early on Nov. 15. Buying a stock ahead of earnings carries extra risk.
Earnings per share are seen falling nearly 10% to $1.31, according to Zacks Investment Research. Revenue is expected to climb nearly 5% to $147.41 billion.
An approach highlighted by Investor's Business Daily is touse options as a strategy to reduce risk around earnings. It's a way to capitalize on the upside potential of a stock's move around earnings, while reducing the downside risk.
Walmart Beats After Warning
Walmart stock was hammered after the firm issued a profit warning on July 25.
It said it expected adjusted earnings per share for the full year to fall 11% to 13%, compared with a forecast in May for a roughly 1% drop.
The company, in revising its forecasts, cited "pricing actions aimed to improve inventory levels at Walmart and Sam's Club in the U.S."
Following the warning, Walmart went on to post EPS of $1.77 a share on August 16. This was above analyst estimates for $1.62 per share. Revenue of $152.9 billion was also above expectations.
Much of that sales gain reflects higher prices, which are responses to rising costs.
Walmart also signaled it's getting a handle on its inventory.
"The actions we've taken to improve inventory levels in the U.S., along with a heavier mix of sales in grocery put pressure on profit margins for Q2 and our outlook for the year," CEO Doug McMillon said in a statement.
Executives told analysts Tuesday that Walmart canceled billions of dollars in orders to help align inventory levels with expected demand. Fewer goods and higher prices resulted in strong revenue as Walmart reported that "mid-to higher-income customers" are flocking to its stores.
It also updated its outlook, saying it now sees full-year adjusted EPS down 9%-11%.For Q3, Walmart expects net sales growth of about 5% along with a 9%-11% decline in adjusted EPS.
Walmart Stock Analysis
Walmart stock now sits in the mid-range of a consolidation pattern. The buy point here is 160.87, MarketSmith analysis shows.
Walmart stock has retaken its 50-day moving average, which is a good sign. WMT stock has also clambered back above the longer-term 200-day moving average.
The relative strength line for Walmart stock is not ideal. It has generally been on the slide since late Nov. 2020. It is remains off its highs for the year despite recent gains. This line gauges a stock's performance vs. the broader S&P 500.
Since the start of the year Walmart stock has fallen by over 4%. This is better than the S&P 500's dip of nearly 18%. But WMT badly lagged the index in 2021.
Longer term, Walmart lagged the S&P 500 throughout the long bull market. In other words, if you had bought the SPDR S&P 500 ETF (SPY) instead of Walmart in 2009, you'd have a bigger gain.
Walmart Stock Fundamentals
In addition to its price performance, fundamentals are also not ideal. This is reflected in the stock's IBD Composite Rating of 70out of a best-possible 99.
The IBD Stock Checkup shows earnings have actually fallen by an average of 4.5% over the past three quarters. This is well short of the 25% growth sought by the CAN SLIM cognoscenti.
The longer term picture is also disappointing for Walmart stock. Over the past three years EPS has grown by an average 10%. Its average revenue growth rate of 4% over this same time period is also not impressive.
Check out Leaderboard, IBD's premium service with annotated charts and timely buy and sell alerts.
Analysts Positive On Walmart Stock
Jefferies analyst Stephanie Wissink has a buy rating on WMT stock but and a price target of 161. She thinks the firm will focus on customer acquisition before pivoting to retention.
"Q2 made progress on costs & inventory, yet inflation pacing & mix shift persisted in bearing down on margins," she said in a research note. "Encouraging signs of relief on consumers at quarter-end. That said, anecdotes re basket structure & guidance being maintained suggest demand signals might not yet be strong enough to call a significant mix pivot back toward gen merch. Digital & alt value streams continue to develop in the background. We think a bigger, better WMT is still in the making."
CFRA analyst Arun Sundaram rates Walmart stock as a buy with a 154 target.
"Although WMT is currently working through some near-term issues (e.g., excess inventory, cost inflation), we see better days ahead as Walmart continues to build out its high margin 'flywheel' businesses, such as Walmart Connect, which reached $2.1 billion in FY 21," he said in a Aug. 27 research note. "Walmart's business model is evolving, which, along with accelerated investments in e- commerce, technology, and automation, will position the company to deliver stronger and more sustainable earnings growth over the long term, in our opinion."
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Walmart+ Ready For Amazon Prime Time
Walmart did a better job handling the post Covid-19 retail landscape than department stores such as Macy's (M). In fact, Walmart's U.S. e-commerce growth has been much faster than Amazon's retail sales growth. It is growing from a much lower base, however.
The Walmart vs. Amazon battle for retail supremacy is raging along multiple fronts, and is blurring the lines between online and offline. Walmart, Target (TGT), Costco (COST) and a few other retail giants are adopting a hybrid model to take on Amazon, leveraging their brick-and-mortar stores in conjunction with digital shopping.
Walmart moved to rope in more customers by rolling out its Walmart+ membership program last year.
"Walmart's Walmart+ program will help retain new customers that it has gained as a result of Covid-19, as well as deepen relationships with long-standing customers, and as such is a positive for the company," Moody's analyst Charlie O'Shea told IBD.
Walmart+ costs $12.95 a month, or $98 a year. The program's benefits can be used, in one way or another, at more than 4,700 stores. The service will offer free delivery on items, at in-store prices, with 2,700 stores capable of offering same-day delivery.
By comparison, Amazon Prime costs subscribers $119 for a year, but offers perks such as Amazon Prime Video. If members want to be charged monthly, the cost is $12.99.
The debut of Walmart+ marks the chain's latest effort to become more of an e-commerce company, as the growth of online shopping remolds customers' habits — a trend that was accelerated by the coronavirus pandemic.
Walmart also teamed up with e-commerce software giant Shopify (SHOP) to help third-party sellers on its marketplace, another venue to take on Amazon.
Is Walmart Stock A Buy?
Walmart stock has not been a long-term stock market leader for many years. It badly lagged the S&P 500 in 2021 but is outperforming in 2022.
But Walmart earnings growth fails to meet the 25% benchmark sought by CAN SLIM connoisseurs. Investors keen on the stock could add it to their watchlist but may get better returns by focusing on companies with superior earnings and strong stock performance, such as those on theprestigious IBD 50 list.
Bottom line: Walmart stock is not a good buy right now. The stock remains well below its latest buy point and is well off highs for the year. Its latest earnings report is also around the corner, which adds risk. In addition, Walmart stock is unlikely to be a huge winner due to its fundamentals, which are not outstanding.
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Walmart has 9.66% upside potential, based on the analysts' average price target. Is WMT a Buy, Sell or Hold? Walmart has a conensus rating of Strong Buy which is based on 25 buy ratings, 5 hold ratings and 0 sell ratings.
Net sales for the year are expected to increase 3.5%, up from a prior range of 2.5% to 3%. Adjusted EPS for the year are slated to range from $6.10 to $6.20, above the $5.90 to $6.05 of the prior forecast. Analysts had forecast sales to rise 3.81% year over year and EPS to hit $3.14.
The 35 analysts offering 12-month price forecasts for Walmart Inc have a median target of 170.00, with a high estimate of 186.00 and a low estimate of 145.00. The median estimate represents a +10.25% increase from the last price of 154.20.
The Rating Outlook is Stable. Walmart's ratings reflect its dominant global retail market share position, with over $600 billion of revenue in 2022, positive comparable store sales (comps), and consistent financial strategy, which has resulted in stable EBITDAR leverage around 2x.
Walmart is trading at a high valuation. The biggest problem I have with Walmart's stock is that it's simply too expensive. That's especially true given the aforementioned challenges and headwinds. At a forward price-to-earnings multiple of 22.6x, it's trading at a higher premium than rival Target.
Walmart is forecasted to grow earnings and revenue by 14.3% and 3.2% per annum respectively. EPS is expected to grow by 15.8%. Return on equity is forecast to be 24.9% in 3 years.
Walmart has received a consensus rating of Moderate Buy. The company's average rating score is 2.83, and is based on 25 buy ratings, 5 hold ratings, and no sell ratings.
Walmart exhibits relatively low volatility with skewness of -0.11 and kurtosis of -0.48. However, we advice investors to further investigate Walmart to ensure all market statistics is disseminated and is consistent with investors' estimations about Walmart upside potential.
With fiscal year 2023 revenue of $611 billion, Walmart employs approximately 2.1 million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy, and employment opportunity.
Despite inflationary pressures, Walmart's cost-cutting and automation strategies enable the company to maintain low prices and protect profit margins. Historically, the company has demonstrated consistent growth during previous recessions, further strengthening its appeal as a recession-resistant investment.
Walmart Inc quote is equal to 154.490 USD at 2023-06-28. Based on our forecasts, a long-term increase is expected, the "WMT" stock price prognosis for 2028-06-23 is 182.460 USD. With a 5-year investment, the revenue is expected to be around +18.1%. Your current $100 investment may be up to $118.1 in 2028.
Is Walmart Stock a good buy in 2023, according to Wall Street analysts? The consensus among 20 Wall Street analysts covering (NYSE: WMT) stock is to Strong Buy WMT stock.
However, over the last five years, Target's +112% has topped Walmart's +80% with both outperforming the benchmark's +54%. When looking at their price-to-earnings valuations, Target stock is more attractive than Walmart at the moment despite its lackluster performance over the last year.
Target's yield is much higher, and the dividend has been expanding more quickly in recent years. The company's 2023 increase was 20%, pushing its yield to 2.6% today. Walmart, in contrast, pays shareholders 1.6% currently, and its latest increase was 2%.
Walmart's goods may be known for their low prices, but you can't say the same about the grocery-chain's stock. Shares have risen 16% over the past year, giving the stock a premium valuation. Trading at nearly 36 times earnings, Walmart shares don't look overvalued at this level.
In 2030, the Walmart stock will reach $ 276.04 if it maintains its current 10-year average growth rate. If this Walmart stock prediction for 2030 materializes, WMT stock willgrow 77.59% from its current price.
According to Walmart's latest financial reports the company's current EPS (TTM) is $4.17. In 2022 the company made an earnings per share (EPS) of $3.26 an increase over its 2021 EPS that were of $2.87.
Future price of the stock is predicted at 261.67219397271$ (68.321% ) after a year according to our prediction system. This means that if you invested $100 now, your current investment may be worth 168.321$ on 2024 June 25, Tuesday.
Walmart shares slump after retailer cuts profit outlook on inflation concerns. Walmart shares fell after the company cut its profit expectations as inflation forces shoppers to spend more on food and less on electronics and other discretionary categories.
The Quarter 4 calendar for year 2023 is a three-month calendar page which is comprised of October, November, and December 2023 calendars. For more information on our quarterly calendar templates and additional options, click here .
Growth of Revenue: You need to examine a Company's revenue, not only on yearly basis but also quarterly. You can buy and hold the stock if quarterly sales show an upward trend. You can consider selling the stock if the Company's earnings have been lower than expected in subsequent quarterly results.
If you are risk-averse and your primary concern is capital preservation and long-term profits, a buy and hold strategy is probably your best choice. If you are okay with more risk and volatility and are willing to put in the time every day to manage your investments, an active trading strategy could work.
The success of buy and hold has been proven by historical data and is the preferred investing strategy of industry giants such as Warren Buffet. Buy and hold is also favorable for investors without a lot of time to spend researching the market.
The Walton family is Walmart's largest shareholder, having approximately 50% of Walmart's shares, worth about $190 billion. Some prominent members of the Walton family are Jim Walton, Rob Walton, Alice Walton, and Lukas Walton.
The company's largest shareholder is Walton Enterprises, LLC, with ownership of 37%. With 9.1% and 4.8% of the shares outstanding respectively, Walton Family and The Vanguard Group, Inc. are the second and third largest shareholders.
The following external factors are threats to Walmart: Competitive threat from online and brick-and-mortar firms. Supply chain disruptions due to political, economic, and health factors. Labor market disruptions.
Consumer staples, utilities, healthcare, streaming, discount store, and even fast food stocks all have a record of positive performance during recessions. Commodities like gold are yet another category of recession-proof stocks because when all else fails, gold stays up.
As of today (2023-06-23), Walmart's share price is $155.46. Walmart's Peter Lynch fair value is $21.30. Therefore, Walmart's Price to Peter Lynch Fair Value Ratio for today is 7.30.
Retail giant Walmart will close 10 U.S.-based locations this year due to poor financial performance, despite the company's overall 7.3% 2022 Q4 revenue increase. The retailer has a track record of shuttering under-performing locations. Walmart closed several stores in 2019 and more than 150 stores in 2016.
The retailer said it expects consolidated net sales to increase 4% in Q2, with consolidated operating income down 2%. For the full year, Walmart expects consolidated net sales to grow approximately 3.5, with operating income up 4 to 4.5%.
Walmart, the world's largest retailer, beat analyst expectations on earnings and sales estimates in its report released Tuesday morning. However, the company announced a lackluster outlook for the fiscal year 2024. Walmart's projection predicts adjusted earnings per share of $5.90 to $6.05, which came below estimates.
The best recession stocks include consumer staples, utilities and healthcare companies, all of which produce goods and services that consumers can't do without, no matter how bad the economy gets.
Historically speaking, investors who hold on to their investments through recessions see their portfolios completely recover, and individuals who don't invest in the market at all lose out.
Is Walmart Stock a good buy in 2023, according to Wall Street analysts? The consensus among 20 Wall Street analysts covering (NYSE: WMT) stock is to Strong Buy WMT stock.
Target's yield is much higher, and the dividend has been expanding more quickly in recent years. The company's 2023 increase was 20%, pushing its yield to 2.6% today. Walmart, in contrast, pays shareholders 1.6% currently, and its latest increase was 2%.
Despite inflationary pressures, Walmart's cost-cutting and automation strategies enable the company to maintain low prices and protect profit margins. Historically, the company has demonstrated consistent growth during previous recessions, further strengthening its appeal as a recession-resistant investment.
And if you had invested $1,000 into Walmart a decade ago, your investment would have more than doubled in value and be worth about $2,443 as of Nov. 15, according to CNBC's calculations.
The third section will help you know the total dividend earned on a 1000$ investment in WMT over 10 years. By investing 1000$ in WMT 10 years ago, you would have earned a total dividend of 315$ (until 2023-06-02). For more detailed history of WMT stock dividend report.
Publicly traded companies continue to see a slide in revenues in the second quarter of 2023. The larger question is how long it will take for earnings to recover. FactSet Research Systems estimates that S&P 500 second-quarter earnings will decline by 6.3%, and revenue will fall by 0.4%.
Introduction: My name is Pres. Carey Rath, I am a faithful, funny, vast, joyous, lively, brave, glamorous person who loves writing and wants to share my knowledge and understanding with you.
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