Reports Q4 2021 results on Thursday, Feb. 18, ahead of the opening
Revenue Expectation: $ 147.98 Billion
EPS expectation: $ 1.51
Even after producing powerful earnings results during the pandemic, it seems investors today want something amazing from Walmart (NYSE :). The stock seems to have lost its appeal in the past three months.
Shares of the world's largest brick-and-mortar retailer fell by more than 3% in the past quarter, while at the same time increasing by 10%. The stock closed at $ 145.67 on Tuesday, up about 1%. They have gained 23% in the past year.
Walmart Weekly Chart.
In essence, it's still a great time for the Bentonville, Arkansas-based company, which sells almost everything that millions of stay-at-home consumers need to live their daily lives during the COVID-19 pandemic. The big-box retailer has consistently shown through his that he hasn't fallen behind in winning over customers who have stimulus dollars to spend.
US comparable sales in stores or digital channels with at least 12 months of operation increased 6.4% in the quarter ended late October. It was the third consecutive quarter of strong growth. US e-commerce sales were up 79% and accounted for much of the previous quarter's profit.
But beneath these impressive numbers, there are signs that stock building may have already peaked during the pandemic. For example, growth in comparable sales in the third quarter was slower than in the previous two quarters, while US store traffic fell 14.2%, suggesting that people are traveling less to Walmart stores.
A Long-Term Bet
Has that normalization of buying patterns continued? Walmart's fourth-quarter earnings in fiscal 2021 will tell tomorrow. If the pandemic is a leading indicator, then chances are we will see another strong result in both online and foot traffic for the period when viral infections were on the rise and many states locked up.
That said, Walmart & # 39; s is not a stock you should own just because it is a winner during the pandemic. The company has shown time and again that it is on track to counter online retailers, such as Amazon (NASDAQ :), by successfully executing its e-commerce strategy. That, coupled with its massive physical presence, provides great long-term value for investors looking to include a solid defensive stock in their portfolios.
In addition, Walmart is also trying to diversify its activities. It is ramping up its digital media unit recently rebranded as Walmart Connect. It will target ads on ecommerce platforms such as Walmart.com and the Walmart app to buyers who buy in real time.
Walmart will also allow brands to advertise on nearly 170,000 digital screens at self-checkout kiosks and on TV walls in more than 4,500 stores. According to the company, Walmart's revenues nearly doubled in Walmart's digital ad sales last fiscal year, and more than twice as many advertisers signed up than a year earlier.
Bottom Line
After a strong rally in the past year, Walmart stocks are taking a breather and may look expensive to some investors. In our view, those concerns ignore the fact that this is not the same company as it was five years ago.
With its e-commerce momentum and strong core physical businesses, we believe WMT is a long-term gamble to earn both capital appreciation and steadily growing dividends, which currently yield 1.50%.
