Walmart Set to Scale Dow After Blowout Earnings

Strong e-commerce growth powered a quarterly earnings beat

Managing Editor
Feb 19, 2019 at 9:09 AM
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The shares of Walmart Inc (NYSE:WMT) are up 2.6% in electronic trading, after the retail giant reported a fourth-quarter adjusted profit of $1.41 per share, easily surpassing the $1.33 per share estimate. Revenue was also higher than anticipated thanks to strong e-commerce growth, while same-store sales rose by 4.2%. And as if that's not enough, Walmart also increased its quarterly dividend by one cent. 

Walmart stock is on track to break through the $100 level today, an area that has served as short-term resistance since a mid-November bear gap. Now, WMT has its sights set on its Nov. 12 all-time high of $106.21.

Analysts have yet to come forward with any bull notes, but there is ample room to do so. Of the 23 brokerages covering WMT, nine still rate it a tepid "hold." Furthermore, the stock's consensus 12-month price target of $106.93 is only a 3% premium to Friday's closing perch of $99.99. 

There's also pessimism in the options pits. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows that WMT's 10-day put/call volume ratio of 0.52 ranks in the 78th percentile of its annual range. This indicates that while bought calls have exceeded puts on an absolute basis in the past two weeks, the rate of put buying relative to call buying has been quicker than usual. At the same time, the March 105 and 110 calls are home to peak front-month open interest, with nearly 35,000 contracts collectively outstanding.


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