By Nigam Arora & Dr. Natasha Arora
Signal(s) to enter, add, reduce, exit, hold or change.
Walmart (WMT) earnings beat expectations, but guidance was below expectations.
From the Morning Capsule,
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Walmart easily beat the earnings estimates.
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Earnings came at $1.71 vs. $1.52 consensus.
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Revenues came at $164B vs. $159.7B consensus.
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Same store sales, open for more than a year jumped 8.3% vs. 4.9% consensus.
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The great earnings from Walmart is the road behind. Prudent investors need to focus on the road ahead. Here is the road ahead as Walmart sees it.
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For fiscal 2024, Walmart sees earnings in the range of $5.90 – $6.05 vs. $6.53 consensus.
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For the first quarter, Walmart sees earnings in the range of $1.25 – $1.30.
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Walmart is projecting sales growth of 2.5% – 3% vs. 3% consensus.
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Walmart is cautious on the consumer going forward.
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Macro Impact
The macro impact on the overall market of cautious comments and lower guidance from Walmart cannot be underestimated because Walmart is the largest retailer. However, for WMT stock, there are other special considerations.
Special Considerations
Here are the key special considerations for WMT stock:
- In the past several quarters, Walmart had built up excessive inventory.
- Walmart has now cleaned up its inventory. This is a positive.
- It is remarkable that Walmart has been able to clean up its inventory without heavy discounting.
- Even after the poor guidance and cautious comments, money is flowing into Walmart stock.
- Smart money is buying Walmart. About 40% of Walmart’s business is groceries. The grocery business adds stability to Walmart.
- Many middle-income consumers who traditionally shopped at stores like Target (TGT) are now shifting to Walmart to save money.
Zones
For those who are following the Good Way, the Buy Now rating is 🔒 (To see the locked content, please take a 30 day free trial).
For those following the Best Way, the buy zone is 🔒.
The recommended quantity is 🔒.
The very long term target is 🔒.
Walmart is a very long term strategic position. Walmart is in the Model Portfolio.
What To Do Now
Those in the stock may consider continuing to hold. Those not in the stock may consider following the parameters given above.
Caution
Consider not buying Walmart right here. Consider waiting for a dip in the buy zone. Using buy zones is one of many techniques billionaires use.
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Nigam Arora
Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.
Dr. Natasha Arora
Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.
