Walmart is the IBD Stock Of The Day as it flaunts profitable retail share growth and growing e-commerce clout. On Monday, Walmart stock flashed a bullish signal as it broke out to fresh record highs.
Walmart: E-commerce Gains, Inflation Winner
Bank of America analysts recently hosted a lunch meeting with Walmart CFO John David Rainey. Takeaways from that meeting included "share gains across incomes (including upper) and categories, improving profitability, and digital advertising and marketplace growth," they wrote in a Jan. 22 note.
The Dow Jones retail giant copied the Amazon playbook to grow online sales and digital businesses. The Bank of America analysts said they see Walmart's e-commerce business becoming profitable within the "next one to two years." They hiked their price target on buy-rated Walmart stock to $110 from $105, citing "a stronger sales and profitability outlook."
In 2024, Walmart and Costco turned into inflation winners. Inflation remains a worry, a consumer sentiment survey for January showed last week.
Walmart stock and Amazon can both be found on IBD's Relative Strength At New High stock list. Amazon stock is also on the Rising Profit Estimates stock list, as well as on SwingTrader.
Costco, like Walmart, is growing online sales. Target, a relative laggard, has tied up with Shopify to expand its online marketplace for third-party merchants.
Walmart Stock Tops Buy Point
Shares of Walmart popped 2.8% to 97.44 and a 52-week high in Monday's stock market action. Walmart stock cleared a 96.18 buy point from a flat base, according to MarketSurge charts.
Walmart stock rocketed 76% in the past year on the back of earnings breakouts and surges.
The relative strength line for Walmart stock also made a new high as shares broke out, a favorable sign. That is marked by the blue dot on the daily chart. A rising RS line means that a stock is outperforming the S&P 500 index. It is the blue line in the chart provided.
A 91 RS Rating means that WMT has outpaced 91% of all stocks in IBD's database over the past year.
Amazon stock edged up on Monday ahead of earnings on Feb. 6. China's DeepSeek AI shook the markets, taking a toll on AI-focused technology stocks in particular. Target and Costco shares gained. Shopify nudged lower.
Walmart Earnings And Outlook
The IBD Stock Checkup tool shows that Walmart stock carries a Composite Rating of 87 out of a best-possible 99. IBD's Composite Rating rolls various fundamental and technical metrics into one easy-to-use score.
The 87 Composite score makes Walmart the No. 1 stock in the discount retail group, which also includes Costco and Target.
Walmart holds an EPS Rating of 84 out of a best-possible 99. Earnings growth averaged 15% over the past three quarters, well above the three-year rate of 5%, the Checkup tool shows.
The Dow Jones retail leader is likely to report earnings for the key holiday quarter of 2024 on Feb. 20.
Analysts expect Walmart earnings per share will rise almost 7% in Q4 and jump 12% for full-year 2024. That would compare to an earnings decline of 3% in 2023.
For the latest third quarter, Walmart delivered an earnings beat-and-raise report. It reported an earnings gain of 14% on a 5% sales gain. Both the top and bottom lines accelerated (slightly for the bottom line) from the prior quarter. That led to a flurry of analyst price-target hikes for WMT stock.
Online Retail Sales Jumped 27% In Latest Quarter
Among other Q3 highlights, Walmart's global e-commerce sales surged 27%. Its global advertising sales grew 28%. U.S. membership income also grew by double digits.
"In the U.S., in-store volumes grew, pickup from store grew faster, and delivery from store grew even faster than that," Walmart CEO Doug McMillon said in an earnings release.
The Dow retailer continues to transform from a traditional brick-and-mortar business model to a more inclusive "omnichannel" one, blurring the boundaries between physical stores and online sales.
Walmart Stock Gets Multiple PT Raises
Analysts continue to raise price targets on Walmart stock. FactSet shows 16 PT hikes in January. No one cut. The average price target of $100.31 implies modest further upside for the Dow giant's shares.
The Stock Checkup tool shows four quarters of rising mutual fund ownership. Fidelity Contrafund holds almost 2 million Walmart shares after hiking its stake in the September 2024 quarter.
However, in 2025, Amazon could supplant Walmart stock as the world's largest company by revenue.
Please follow Aparna Narayanan on X @IBD_Aparna for more coverage.
