Could Q3 Earnings Be the Catalyst Walmart Stock Has Been Looking For?

WMT is due to report earning on Tuesday, Nov. 16

Nov 10, 2021 at 11:36 AM
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Walmart Inc. (NYSE:WMT) is an American multinational retail corporation that operates a chain of supercenters, discount department stores, and grocery stores. WMT operates approximately 10,500 stores and clubs under 48 banners in 24 countries and employs 2.2 million associates worldwide. The company is gearing up to report its third-quarter earnings results, due out before the open on  Tuesday, Nov. 16. Wall Street analysts anticipate that Walmart stock's earnings will come in at $1.39 per share in this upcoming earnings report.

The stock has been the recipient of some bullish analyst attention recently, with Goldman Sachs adding WMT to its "Conviction Buy" list in mid-October. Sentiment surrounding Walmart ahead of its earnings event is largely bullish. Of the 19 in coverage, 15 say "buy" or better. Meanwhile, the 12-month consensus price target of $169.79 is a 13.7% premium to current levels. 

Walmart stock is clinging to its year-to-date breakeven with a 3.4% lead, after an October rally helped it break through the level. This rally lost momentum at the $152 level, but it looks like WMT could find some support at the  $149 level, and lower down at the 20-day moving average. Additionally, Walmart offers a forward dividend of $2.20 and a dividend yield of 1.47%.

wmt nov 10

From a fundamental point of view, Walmart stock continues to have long-term growth potential. However, at a market capitalization of $418 billion and a price-earnings ratio of 42.2, that growth will likely come at a fairly slow rate.

Furthermore, WMT has only increased revenues 13% since fiscal 2018 and 8% since reporting fiscal 2020 results, despite maintaining consistent growth on an annual basis. In addition, Walmart’s growth rate has been far less consistent on the bottom line, with WMT's net income decreasing 32.5% since fiscal 2020. Walmart also experienced a significant decline in fiscal 2019, leaving its net income at just 2% growth since fiscal 2018.

Nonetheless, Walmart stock's forward price-earnings ratio of 22.68 provides some hope that WMT will soon resume its bottom line growth.


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