Retail giant Walmart (WMT) is well positioned to take advantage of Black Friday. The event is expected to boost the company’s sales. In addition, the company’s third-quarter results were better than expected. With the stock gaining momentum recently, it may be wise to buy it now. Read more….
The Black Friday event has grown over the years into a prominent retail event, with significant worldwide sales. The United States accounts for the largest share of sales of this event in the global market. The net worth of the global Black Friday sales market is estimated be about $273.10 billion by 2022.
Retail juggernaut Walmart Inc. (WMT) wants to boost its sales this Black Friday. is expected from the company spread the Black Friday savings about events in November and closing deals for a month with Cyber Monday. The company is also bringing back its Early Access benefit for Walmart+ members.
The company’s earnings per share for the third quarter beat the consensus estimate of $1.32 by 14%, while revenue beat the $146.80 billion estimate by 3.2%.
The stock is up 4.8% since the start of the year and 10.9% over the past month to close out its last trading session at $151.69. It is trading higher than its 50 days Moving Average of $137.33 and a 200-day moving average of $136.63, indicating an upward trend.
Here are the factors that can affect WMT performance in the short term:
For the fiscal third quarter ended Oct. 31, WMT’s total revenues increased 8.7% year over year to $152.81 billion. This can be attributed to an 8.8% year-over-year increase in net sales to $151.47 billion. Adjusted operating income (constant currency) improved 4.6% over the same period last year to $6.06 billion. Adjusted earnings per share increased 3.4% year over year to $1.50.
Favorable analyst sentiment
Consensus revenue estimates of $159.20 billion and $146.13 billion for consecutive quarters ending January and April 2023 point to 4.1% and 3.2% year-over-year increases, respectively. The fiscal 2023 street revenue estimate of $606.03 billion reflects a 5.8% year-over-year increase. Earnings per share are expected to grow at 4.3% per annum over the next five years.
Of the 24 Wall Street analysts who have rated WMT in the past three months, 20 have rated the stock Buy, while four have rated it Hold. The median 12-month price target of $162.83 indicates a 7.3% potential upside. The price targets range from a low of $140 to a high of $175.
In February, WMT approved an annual cash dividend for fiscal 2023 of $2.24 per share, representing an increase of approximately 2% over the $2.20 per share paid for the past fiscal year. The next quarterly dividend tranche of $0.56 per share is payable January 3, 2023.
The annual dividend yield is 1.48% on the current share price. The company has a payout ratio of 36.56%. Dividend payments have increased at a CAGR of 1.9% over the past three and five years. The company has a record 48 years of consecutive dividend growth.
POWR ratings reflect promising outlook
WMT’s strong fundamentals are reflected in its POWR ratings. The stock has an overall rating of A, which equates to a strong buy in our proprietary rating system. The POWR ratings are calculated by considering 118 different factors, with each factor optimally weighted.
Our proprietary rating system also evaluates each stock based on eight different categories. WMT has a sentiment grade of A, in line with favorable analyst estimates. The stock also has a B rating for stability, consistent with its five-year beta of 0.53.
In the 39 stock Grocery / Big Box Retailers industry, it ranks number 10. The industry is rated A.
click here to see the additional WMT (Growth, Value, Momentum and Quality) POWR ratings.
View all the top stocks in the Supermarket/Big Box Retailers sector here.
It boils down
WMT is trying to take advantage of the Black Friday weekend. In addition, the company has shown its resilience by paying higher dividends in recent years. Since the company has a leading position in retail, it could be a solid buy ahead of Black Friday.
How does Walmart Inc. (WMT) turns to its competitors?
While WMT has an overall POWR rating of A, one might consider looking at industry peers, Ingles Markets, Incorporated (IMKTA) and Village Super Market, Inc. (VLGEA), which also have an overall A rating (Strong Buy).
WMT shares rose $0.40 (+0.26%) in premarket trading on Wednesday. Year-to-date, WMT has gained 6.51%, versus an increase of -14.81% in the benchmark S&P 500 index over the same period.
About the author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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