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Is Wal-Mart (WMT) the Best Stock for Back-to-School Season?
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Back-to-school season is almost upon us, and that means investors needs to start looking at companies that thrive during this time of the year. Just like during the holidays, retailers around the country will be using special promotions and deals to attract the most customers during this busy shopping period.
During the back-to-school season, investors need to remember how the market tends to react to things. While back-to-school business will already be priced in to most retail stocks, the market will always tend to react positively to any additional news about a company’s success during promotional periods.
With that in mind, the best back-to-school stocks are those that are already poised to succeed with strong fundamental metrics and are also in a competitive position to get the most back-to-school shoppers through the doors.
For this back-to-school season, one of the stocks that sticks out is Wal-Mart (WMT - Free Report) . Currently, Wal-Mart is a Zacks Rank #2 (Buy), and based on forecasts about this year’s retail shopping behavior, the company should be ready to win the back-to-school race.
The Numbers
The vast majority of Wal-Mart’s back-to-school revenue will come in the current quarter, but the company has yet to report its results for the period ending in July. For that quarter, Wal-Mart has seen two positive estimate revisions in the past 30 days. With its strong Zacks Rank and a positive Earnings ESP of 1%, investors should feel more comfortable about the possibility of a beat when Wal-Mart reports on the 18th.
For the “back-to-school quarter,” Wal-Mart is already starting to see positive revision activity. We have seen one positive revision within the past 30 days, and the company currently has a positive Earnings ESP of 7.45%. On top of this, Wal-Mart is looking to shake off sluggish sales numbers, and our revenue estimate of $118.8 billion would represent growth of nearly 1.2%.
Cashing in on Trends
While the fundamental figures look great, it’s also important to note that Wal-Mart is the exact type of store that looks to have a great back-to-school season this year. According to research from the National Retail Federation, families this year are feeling more confident about the economy and will spend more money on back-to-school supplies.
The NRF projects that the average family buying supplies for K-12 students will spend $673.57, up from last year’s $630.26. Spending is expected to be higher in the college market as well, with total spending by families of college students projected to grow over $5 billion to $48.5 billion.
This spells good news for Wal-Mart, which stocks everything under the sun and appeals to both K-12 students and college students. Also, the NRF says that 46% of parents will shop online, up from just 36% last year, which should be great for Wal-Mart’s recently-invigorated e-commerce segment.
Bottom Line
Wal-Mart and its investors always expect stores to be busy during the back-to-school season, but this year it looks like all of the pieces are in place for a better-than-expected period. If you want to look at more back-to-school stocks, check out our 5 Stocks to Watch This Back-to-School Season.
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Is Wal-Mart (WMT) the Best Stock for Back-to-School Season?
Back-to-school season is almost upon us, and that means investors needs to start looking at companies that thrive during this time of the year. Just like during the holidays, retailers around the country will be using special promotions and deals to attract the most customers during this busy shopping period.
During the back-to-school season, investors need to remember how the market tends to react to things. While back-to-school business will already be priced in to most retail stocks, the market will always tend to react positively to any additional news about a company’s success during promotional periods.
With that in mind, the best back-to-school stocks are those that are already poised to succeed with strong fundamental metrics and are also in a competitive position to get the most back-to-school shoppers through the doors.
For this back-to-school season, one of the stocks that sticks out is Wal-Mart (WMT - Free Report) . Currently, Wal-Mart is a Zacks Rank #2 (Buy), and based on forecasts about this year’s retail shopping behavior, the company should be ready to win the back-to-school race.
The Numbers
The vast majority of Wal-Mart’s back-to-school revenue will come in the current quarter, but the company has yet to report its results for the period ending in July. For that quarter, Wal-Mart has seen two positive estimate revisions in the past 30 days. With its strong Zacks Rank and a positive Earnings ESP of 1%, investors should feel more comfortable about the possibility of a beat when Wal-Mart reports on the 18th.
For the “back-to-school quarter,” Wal-Mart is already starting to see positive revision activity. We have seen one positive revision within the past 30 days, and the company currently has a positive Earnings ESP of 7.45%. On top of this, Wal-Mart is looking to shake off sluggish sales numbers, and our revenue estimate of $118.8 billion would represent growth of nearly 1.2%.
Cashing in on Trends
While the fundamental figures look great, it’s also important to note that Wal-Mart is the exact type of store that looks to have a great back-to-school season this year. According to research from the National Retail Federation, families this year are feeling more confident about the economy and will spend more money on back-to-school supplies.
The NRF projects that the average family buying supplies for K-12 students will spend $673.57, up from last year’s $630.26. Spending is expected to be higher in the college market as well, with total spending by families of college students projected to grow over $5 billion to $48.5 billion.
This spells good news for Wal-Mart, which stocks everything under the sun and appeals to both K-12 students and college students. Also, the NRF says that 46% of parents will shop online, up from just 36% last year, which should be great for Wal-Mart’s recently-invigorated e-commerce segment.
Bottom Line
Wal-Mart and its investors always expect stores to be busy during the back-to-school season, but this year it looks like all of the pieces are in place for a better-than-expected period. If you want to look at more back-to-school stocks, check out our 5 Stocks to Watch This Back-to-School Season.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>