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Buy Underperforming Walmart Stock Before Q4 Earnings?
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Walmart (WMT - Free Report) shares have slipped over 4% in the last three months to lag the S&P 500’s 10% climb and rival Target’s (TGT - Free Report) 17% jump. Luckily, WMT will have a chance to possibly breakout of its slump amid what has been a strong fourth quarter earnings season, with it set to release its Q4 fiscal 2021 financial results on Thursday, February 18.
E-Commerce & Coronavirus-Shopping
Walmart now has multiple delivery and pick up options and its e-commerce platforms are more robust than ever, as it continues to invest in the future of the industry where consumers demand as many options as possible. WMT also in mid-September launched its subscription service to help it further challenge Amazon (AMZN - Free Report) .
The service, dubbed Walmart+, costs $98 a year vs. Amazon Prime’s $119, and offers unlimited free deliveries. Members also get discounts on fuel and access to new-age in-store checkout offerings.
WMT has also expanded its consumer base and diversified its portfolio as smaller brands thrive online. This includes teaming up with secondhand e-commerce clothing firm ThredUp, partnering with Shopify (SHOP - Free Report) to bring more small businesses to its own third-party marketplace, and more. And Walmart has spent to beef up its digital advertising business.
These efforts have helped Walmart thrive during the pandemic shopping environment that likely helped speed up the adoption of e-commerce. With this in mind, WMT’s Q3 comps popped 6.4%, with e-commerce sales up 79%, down from 9.3% and 97% in Q2.
Zacks estimates call for Walmart’s Q4 comparable sales to pop 5.2%, with its adjusted EPS set to climb 6.5% to $1.47 a share. Looking ahead, its first quarter sales are projected to dip slightly below the hard-to-compared Q1 that included the initial lockdown spending spree. This could prove to be the theme for WMT and some other retailers this year, as it will be nearly impossible to match its coronavirus growth going forward.
Bottom Line
WMT has crushed our adjusted earnings estimates in the last two quarters and the overall Q4 earnings season has been strong, which could be a good sign for Walmart and the other retailers that report their earnings soon.
Walmart is a Zacks Rank #3 (Hold) right now, with a 1.5% dividend yield that tops the 10-year U.S. Treasury. Still, it could be hard to impress Wall Street even though it has underperformed the market. Therefore, investors might want to wait for Walmart’s guidance before considering the retail powerhouse.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Buy Underperforming Walmart Stock Before Q4 Earnings?
Walmart (WMT - Free Report) shares have slipped over 4% in the last three months to lag the S&P 500’s 10% climb and rival Target’s (TGT - Free Report) 17% jump. Luckily, WMT will have a chance to possibly breakout of its slump amid what has been a strong fourth quarter earnings season, with it set to release its Q4 fiscal 2021 financial results on Thursday, February 18.
E-Commerce & Coronavirus-Shopping
Walmart now has multiple delivery and pick up options and its e-commerce platforms are more robust than ever, as it continues to invest in the future of the industry where consumers demand as many options as possible. WMT also in mid-September launched its subscription service to help it further challenge Amazon (AMZN - Free Report) .
The service, dubbed Walmart+, costs $98 a year vs. Amazon Prime’s $119, and offers unlimited free deliveries. Members also get discounts on fuel and access to new-age in-store checkout offerings.
WMT has also expanded its consumer base and diversified its portfolio as smaller brands thrive online. This includes teaming up with secondhand e-commerce clothing firm ThredUp, partnering with Shopify (SHOP - Free Report) to bring more small businesses to its own third-party marketplace, and more. And Walmart has spent to beef up its digital advertising business.
These efforts have helped Walmart thrive during the pandemic shopping environment that likely helped speed up the adoption of e-commerce. With this in mind, WMT’s Q3 comps popped 6.4%, with e-commerce sales up 79%, down from 9.3% and 97% in Q2.
Zacks estimates call for Walmart’s Q4 comparable sales to pop 5.2%, with its adjusted EPS set to climb 6.5% to $1.47 a share. Looking ahead, its first quarter sales are projected to dip slightly below the hard-to-compared Q1 that included the initial lockdown spending spree. This could prove to be the theme for WMT and some other retailers this year, as it will be nearly impossible to match its coronavirus growth going forward.
Bottom Line
WMT has crushed our adjusted earnings estimates in the last two quarters and the overall Q4 earnings season has been strong, which could be a good sign for Walmart and the other retailers that report their earnings soon.
Walmart is a Zacks Rank #3 (Hold) right now, with a 1.5% dividend yield that tops the 10-year U.S. Treasury. Still, it could be hard to impress Wall Street even though it has underperformed the market. Therefore, investors might want to wait for Walmart’s guidance before considering the retail powerhouse.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
AccessZacks Top 10 Stocks for 2021 today >>