Walmart Stock Stumbles After Earnings

The blue chip has erased early post-earnings gains

Deputy Editor
Nov 15, 2018 at 11:53 AM
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Walmart Inc (NYSE:WMT) announced mixed third-quarter results last night, and after pointing higher in pre-market trading, the shares are down 1.5% to trade at $100.03, at last check. The big box retailer's quarterly adjusted earnings and same-store sales beat analysts' expectations, and the company lifted its full-year guidance. However, traders appear to be concerned about profit margins, and a dismal day for other retailers -- not to mention news that Warren Buffett's Berkshire Hathaway dissolved its WMT stake -- hasn't helped.

WMT stock rallied after a post-earnings bull gap in mid-August, culminating in a high of $106.21 earlier this month -- within striking distance of its Jan. 29 high of $109.98. However, the equity is set for a fourth straight daily loss, but could find support atop its 30-day moving average. Plus, WMT has been among the best retail stocks to own in the November-December period over the past 10 years, per Schaeffer's Senior Quantitative Analyst Rocky White.

Analysts were fairly bullish pre-earnings, with over half calling Walmart a "buy" or better. On the other hand, there was pessimism in the options arena. The current Schaeffer's put/call open interest ratio (SOIR) of 0.77 sits in the 78th percentile of its annual range, suggesting that short-term options traders are more put-heavy than usual. In addition, WMT's 10-day put/call volume ratio of 0.50 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is in the 85th percentile of its annual range. This suggests that while traders bought to open WMT calls over puts on an absolute basis, they picked up bearish bets at a faster-than-usual clip in the past two weeks.

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