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

Zacks Equity Research

In the latest trading session, Walmart (WMT) closed at $119.22, marking a +0.15% move from the previous day. This change lagged the S&P 500's 0.56% gain on the day. Meanwhile, the Dow gained 0.49%, and the Nasdaq, a tech-heavy index, added 1.01%.

Prior to today's trading, shares of the world's largest retailer had gained 0.63% over the past month. This has lagged the Retail-Wholesale sector's gain of 0.67% and the S&P 500's gain of 1.38% in that time.

Investors will be hoping for strength from WMT as it approaches its next earnings release, which is expected to be November 14, 2019. In that report, analysts expect WMT to post earnings of $1.09 per share. This would mark year-over-year growth of 0.93%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $128.99 billion, up 3.28% from the year-ago period.

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.

Any recent changes to analyst estimates for WMT should also be noted by investors. 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.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.04% higher within the past month. WMT is holding a Zacks Rank of #2 (Buy) right now.

Valuation is also important, so investors should note that WMT has a Forward P/E ratio of 24.21 right now. Its industry sports an average Forward P/E of 14.24, so we one might conclude that WMT is trading at a premium comparatively.

Also, we should mention that WMT has a PEG ratio of 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 was holding an average PEG ratio of 1.91 at yesterday's closing price.

The Retail - Supermarkets industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 223, putting it in the bottom 13% 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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