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Walmart (WMT) Gains But Lags Market: What You Should Know

Zacks Equity Research

Walmart (WMT) closed the most recent trading day at $119.53, moving +0.3% from the previous trading session. This change lagged the S&P 500's 1% gain on the day.

Coming into today, shares of the world's largest retailer had gained 3.12% in the past month. In that same time, the Retail-Wholesale sector lost 2.76%, while the S&P 500 lost 1.22%.

Investors will be hoping for strength from WMT as it approaches its next earnings release, which is expected to be November 14, 2019. On that day, WMT is projected to report earnings of $1.09 per share, which would represent year-over-year growth of 0.93%. Meanwhile, our latest consensus estimate is calling for revenue of $128.99 billion, up 3.28% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4.92 per share and revenue of $526.97 billion, which would represent changes of +0.2% and +2.44%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for WMT. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.04% higher within the past month. WMT is currently a Zacks Rank #2 (Buy).

Investors should also note WMT's current valuation metrics, including its Forward P/E ratio of 24.24. For comparison, its industry has an average Forward P/E of 13.69, which means WMT is trading at a premium to the group.

Meanwhile, WMT's PEG ratio is currently 5.12. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Retail - Supermarkets industry currently had an average PEG ratio of 1.85 as of yesterday's close.

The Retail - Supermarkets industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 220, putting it in the bottom 14% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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