It’s time to talk about a big box retail name that has been selling off in recent weeks. Here is the breakdown on $WMT, otherwise known as Walmart.
Current Price: $143.50
52/Wk High: $153.66
52/Wk Low: $102.00
Market Cap: $406.0 Billion
Dividend: $2.16 / 1.51% Yield
Read below for the breakdown!
Walmart is one of the most well known wholesale retail brands in the world with 4,756 locations and an international online presence, competing against the likes of Amazon and Costco.
Recently Walmart stock accelerated to the downside, due to a recent lawsuit filed against the retail giant by the Trump administration arguing that Walmart had a major hand in the opioid crisis.
Whether Walmart acted in an irresponsible manner or not, Walmarts fundamentals remain intact, and the company is adamant that there was no wrongdoing.
While Walmarts legal battles may affect the stock in the short term, there is no reason to believe that $WMT will not continue to trend to the upside in the mid to long-term.
As for the future, Walmart management is seeking to grow its online presence and has not only invested in their own company but JD.com as well.
Breaking down the stock price itself
according to TREFIS (@trefis), 69.13% of Walmart stock is priced on the Wal-Mart US segment.
Furthermore, 24.39% of the stock is based on the Wal-Mart International segment, 5.68% the Sam’s Club segment, and 0.80% is based on the company’s Memberships & other income segments.
Digging into the numbers Walmart ($WMT) beat Q3 2021 expectations with an EPS of $1.34, much better than the analyst’s consensus EPS estimate of $1.18. Not only did Walmart beat on EPS but saw plenty of growth under the hood.
Walmart reported Q3 revenues of $134.7 billion, representing 5.2% growth and or an increase of $6.7 billion. Not only that, but Walmart reported that US comp sales increased by 6.4%, with a majority of that increase deriving from general merchandise, food, and health products.
The company continued to hit home runs with its online platform, reporting that US e-commerce sales increased 79% throughout Q3. Sam’s Club online sales also continued to improve, increasing by 41%.
As for Sam’s Club’s comp sales, the Walmart branch saw 11.1% growth in comp sales. Sam’s Club membership income increased by 10.4% as well.
Shifting back to Walmart, net sales on an international basis increased by 1.3%, totaling $29.6 billion. Although it is important to note that if it weren’t for changes in currency net sales would have been $1.1 billion more.
Walmart went on to report a Q3 operating income level of $5.8 billion (Up 22.5%), operating cash flow of $22.9 billion (Up $8.3 billion), and total capital expenditures of $6.4 billion (Down $1.3 billion).
In total, Walmart management reported a Q3 free cash flow of $16.4 billion, representing a $9.7 billion increase in free cash flow throughout the third quarter of FY 2021.
Management was upbeat about the future and retail trends.
“We think these new customer behaviors will largely persist and we’re well-positioned to serve customers with the value and experience they’re looking for,” CEO Doug McMillion said.
Shifting into the balance sheet the numbers are solid.
Total Debt: $50.771 Billion
Total Liabilities: $169.432 Billion
Total Assets: $250.863 Billion
Cash & Short Term Inv: $14.325 Billion
While the numbers are great the valuation is respectable.
Price to Earnings: 20.72x
Price to Sales: 0.74x
Price to Book: 4.99x
Price to Cash Flow: 12.70x
As for management, leadership has done a solid job.
Return on Equity: 25.79%
Return on Assets: 8.15%
Return on Invested Capital: 13.07%
Given the numbers, the analysts remain bullish on Walmart with the mean price target sitting at $163.28/share, representing a 13.78% upside.
It is also important to note that the high price target is $180.00/share, representing a 25.44% gain, while the low price target is $137.00/share, representing a -4.53% loss.
The big money is much less involved with only 28.85% of Walmart being owned by institutions. Top holders include The Vanguard Group, BlackRock Institutional Trust, and State Street Global Advisors.
On a technical basis, Walmart could be flashing opportunity. According to the six-month charts, the MACD is moving with large downward momentum within a range of -0.2938 down to -0.9500.
The six-month charts are also indicating an RSI of 36.65 and CCI of -115.99, both of which are on the low end. Walmart also trades quite a distance off its highs of $153.6597.
In short, Walmart is a solid long term pick and possibly mid-term investment, given the solid growth across the board, increasing e-commerce shopping, and its currently respectable valuation.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply an opinion based on independent research.
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