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

Zacks Equity Research
·3 min read

Walmart (WMT) closed at $140.40 in the latest trading session, marking a +1.19% move from the prior day. This change lagged the S&P 500's 1.23% gain on the day. Meanwhile, the Dow gained 1.6%, and the Nasdaq, a tech-heavy index, added 0.42%.

Coming into today, shares of the world's largest retailer had lost 3.03% in the past month. In that same time, the Retail-Wholesale sector lost 1.85%, while the S&P 500 lost 2.51%.

WMT will be looking to display strength as it nears its next earnings release, which is expected to be November 17, 2020. The company is expected to report EPS of $1.18, up 1.72% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $131.79 billion, up 2.97% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.35 per share and revenue of $551.18 billion, which would represent changes of +8.52% and +5.19%, respectively, from the prior year.

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

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

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. Within the past 30 days, our consensus EPS projection has moved 0.02% lower. WMT currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that WMT has a Forward P/E ratio of 25.95 right now. For comparison, its industry has an average Forward P/E of 14.06, which means WMT is trading at a premium to the group.

Also, we should mention that WMT has a PEG ratio of 4.72. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Retail - Supermarkets industry currently had an average PEG ratio of 2.27 as of yesterday's close.

The Retail - Supermarkets industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 84, which puts it in the top 34% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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Zacks Investment Research