Walmart Reports Solid Quarter Led By Grocery Business

Walmart Inc. (Ticker Symbol: WMT) released quarterly earnings and revenue that were better than the street was expecting.  The retail giant reported an earnings per share beat of $1.16 cents per share vs. Wall Street analysts’ expectations of $1.09 cents per share.  However, Walmart reported a slight revenue miss of $127.99 billion vs. Wall Street analysts’ estimates of $128.65 billion.

Additionally, the company released that same-store sales were up 3.2% vs. 3.1% that Wall Street was looking for.  Walmart’s e-commerce sales were up over 40% for the quarter led by a solid performance by its online grocery business.

Walmart moved into the grocery delivery space and has been testing it out in three different cities across the US.  The company is now offering a “Delivery Unlimited” option for $12.95 monthly or $98.00 annually for unlimited grocery deliveries from roughly 1,400 locations across the country.  Walmart also has the curbside pickup for online orders at 2,700 locations in the US.

The above image is a chart of Walmart’s stock over the past 12 months.  The stock started off in the first quarter with a positive move higher, breaking through its minor downtrend from 2018.  The stock spent the next four months trading in an ascending triangle pattern.  The top part of the triangle appears flat and the bottom part of the triangle has an upward slant.

Some traders use what’s called a “measured move” to try and project where the stock might go in the future based on breakouts from technical formations. In Walmart’s case, one would take the bottom price (widest point) from the triangle pattern (roughly $94) and the price of the flat top line from the pattern (roughly $104) then subtract them to get the difference ($10). The difference is then projected from the breakout point in the direction of the breakout to project the price of the measured move (Top/Flatline – Difference = Measured Move). In Walmart’s case, the projected price target from the ascending triangle pattern was $114.00, which the stock achieved roughly six weeks after breaking out.  The stock then proceeded to trade higher finding dynamic support at its 50-day moving average and trading to an all-time high this week of $125.38.

Traders who are bullish on crude Walmart should watch the MACD buy signal and its crossing of the zero-line for a possible move back higher to retest its all-time high of $125.38.

Traders who are bearish on Walmart should watch for a potential move back below its 50-day simple moving averages around the $118.25 price level for a possible move down to its August earnings gap right around the $108.00 price level.

(Chart above courtesy of ​www.tipranks.com​)

Based on a survey of 22 analysts offering 12-month price targets, the average price target for Walmart’s stock is $123.24. According to that number, the stock is priced at a discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $112.99

Investors in the space should look to competitor Target’s (Ticker Symbol: TGT) earnings release on November 20th for fresh news within the sector.

 


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