The Walmart (WMT) stock price is under pressure ahead of the company’s quarterly results scheduled for Tuesday this week. The stock is trading at $147, which is about 3.30% below its highest level this year. It is also about 17% above the lowest level this week.
Walmart earnings ahead
Walmart was one of the top companies that benefited substantially during the Covid-19 pandemic. Indeed, the company managed to grow its annual sales from more than $559 billion in 2020 from the previous $523 billion. But because of rising costs, the company’s net income dropped to about $13 billion.
The Walmart stock price will be in the spotlight this week since the company will publish its quarterly results.
Data compiled by SeekingAlpha shows that analysts expect that Amazon’s revenue was $134 billion in the quarter. Its earnings per share are expected to come in at about $1.39. In the previous quarter, Walmart’s revenue and EPS were $139.87 billion, while its EPS was about $1.78.
Walmart’s revenue has beaten analysts’ estimates in the past six straight quarters. According to FactSet, more than 80% of all companies in the S&P 500 index have also beaten the analysts’ forecasts. Therefore, there is a likelihood that the company will also deliver better results.
What to watch in Walmart’s earnings
In addition to the headline numbers, analysts and investors will be focusing on several other items when Walmart publishes its results.
First, they will watch out for the impact of the ongoing inflation and supply shortages on the company’s business. Because of Walmart’s scale, there is a likelihood that the firm’s business will be able to handle the situation well. In its earnings report a few weeks ago, Amazon said that the supply challenges had led to a significant weakness of its business.
Second, the market will watch out for the strength of the company’s Walmart+ delivery subscription service. A recent survey by Morgan Stanley found that the service has about 14.1 million users. This will be a remarkable story since the firm launched the product in September last year. Customers pay $98 per year or $12.95 a month.
Third, analysts will focus on the company’s guidance for the upcoming holiday season. With consumer prices surging, analysts expect that the company could see slow growth in the coming months.
Is Walmart a good investment?
Fundamentally, Walmart is a good company that has been resilient over the years. Its online sales have also jumped substantially in the past few years. Additionally, Walmart is a good rewarder for shareholders. It has a dividend yield of about 1.48% and share buybacks. The firm has bought back its own shares worth $38 billion since 2015.
Most analysts also have a favorable view of Walmart’s stock. For example, in recent ratings, analysts at Deutsche Bank, Goldman Sachs, Morgan Stanley, and Tigress Financial have reiterated their bullish call. Those at Deutsche Bank expect that the stock will climb to about $183.
Walmart stock price analysis
The daily chart shows that the Walmart stock price has found strong resistance at $152. Indeed, it has formed a double-top pattern at this level. This is notable since the shares have struggled to move above this level several times in the past few months. The stock is above the 25-day and 50-day Moving Averages, while the MACD is above the neutral level.
Therefore, with sentiment being quite bearish, there is a likelihood that the stock will bounce back after it publishes its earnings on Tuesday.
