Dow Jones retail behemoth Walmart is the IBD Stock Of The Day Thursday. Walmart stock is basing near a buy point while its relative strength line surges to new highs amid the weaker market.
Retailers largely buckled in Q2 on concerns of softer consumer spending after reporting big gains at the start of the year. Meanwhile, organized crime and retail theft continue to gouge earnings and is a growing problem for the industry.
Walmart earnings growth slowed to 4% for Q2 2024 results after two quarters of accelerating, double-digit gains. Revenue growth hovered in the mid- to upper-single digits the past five quarters. Still, the results beat expectations of a 3.4% earnings decline on 4.8% revenue growth.
Walmart U.S. e-commerce sales jumped 24% for the quarter. Comparable sales excluding fuel rose 6.3% and beat Wall Street estimates of 4.3% growth. Same-store sales at Sam's Club rose 5.5% while Walmart U.S. stores saw a 6.4% increase in comparable traffic.
Walmart lifted its outlook on results and guided full-year adjusted earnings of $6.36-$6.46 per share on 4% to 4.5% net sales growth. The outlook was ahead of analyst forecasts of $6.30 per share and in-line with revenue predictions of $637.93 billion. The company previously expected EPS of $6.10-$6.20 on 3.5% sales growth.
Walmart expects earnings between $1.45 and $1.50 per share on 3% net sales growth for Q3 results on Nov. 16. Analysts polled by FactSet expect Q3 earnings of $1.49 per share on $157.22 billion in revenue.
The Dow Jones stock ranks third in the Retail-Major Discount Chains industry group, according to the IBD Stock Checkup. Costco leads the industry group.
Among other discount retailers, Costco, Ollie's Bargain Outlet, BJ's Wholesale Club and TJX are holding up fairly well.
Rival Target, however, has tumbled 25.7% so far this year and is trading at its lowest levels since April 2020.
Walmart Stock
WMT stock is trading in a shallow cup base with a 165.85 buy point, matching its all-time high from Sept. 13. The buy zone, which extends 5% beyond the buy point, stretches to 174.14.
Walmart's relative strength line is surging, hitting new highs. The RS line, the blue line in the chart provided, tracks a stock's performance vs. the S&P 500 index. The RS line hitting a new high before the stock is highly bullish.
Walmart stock has an 89 RS Rating. Shares have a 83 EPS Rating.
WMT stock has an 87 Composite Rating out of a best-possible 99. The Composite Rating combines various technical indicators into one easy-to-read score.
The market is in a correction, meaning it's not a good time to buy new stocks. IBD recommends limiting portfolio exposure right now to 20% of capital at most. WMT stock is a good candidate to place on watchlists and wait for the market to execute a follow-through day.
Walmart stock rallied nearly 15% so far this year.
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