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Walmart (WMT) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research

Walmart (WMT) closed at $129.30 in the latest trading session, marking a -0.08% move from the prior day. This change lagged the S&P 500's 0.72% gain on the day. Elsewhere, the Dow gained 0.89%, while the tech-heavy Nasdaq added 1.47%.

Heading into today, shares of the world's largest retailer had gained 8.55% over the past month, lagging the Retail-Wholesale sector's gain of 10.77% and outpacing the S&P 500's gain of 5.85% in that time.

Investors will be hoping for strength from WMT as it approaches its next earnings release, which is expected to be August 18, 2020. On that day, WMT is projected to report earnings of $1.09 per share, which would represent a year-over-year decline of 14.17%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $133.97 billion, up 2.76% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4.93 per share and revenue of $545.29 billion, which would represent changes of 0% and +4.07%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for WMT. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

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 0.06% lower within the past month. WMT is holding a Zacks Rank of #4 (Sell) right now.

Looking at its valuation, WMT is holding a Forward P/E ratio of 26.25. This valuation marks a premium compared to its industry's average Forward P/E of 18.24.

We can also see that WMT currently has a PEG ratio of 4.66. 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. WMT's industry had an average PEG ratio of 2.58 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 75, which puts it in the top 30% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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Zacks Investment Research