2023-11-14 08:58:06 ET
Walmart Inc. (NYSE:WMT) traded at a record $167.68 on Tuesday, extending gains in the month to 4%. The stock has been bullish since its $118 low in June, with retail news reinforcing a further upside.
Walmart reports the quarter results on November 16, 2023, before the market opens. The projected earnings for the quarter is $1.51, slightly higher than last year’s $1.5. In its last quarter, the retailer posted earnings of $2.92 per share, surpassing $1.7 per share estimates. Walmart has notoriously exceeded earnings and revenue estimates in the previous four quarters.
Earnings trends and recent share performance signal that Walmart is set for another robust quarter. The company has enjoyed stellar rising sales as budget-conscious consumers continue to hunt for bargains. Walmart is known for its low-price business model, attracting consumers as price pressures remain elevated.
In Q2, CEO Doug McMillon said job recoveries and pockets of disinflation contributed to a strong performance. The strengths saw the company increase its sales and profit projections for the second time in the year. The retailer now anticipates between $6.36 and $6.46 EPS, up from the previous $6.10 to $6.20. However, McMillon cautioned on rising energy costs, higher borrowing, and tighter lending environments.
As Walmart reports its earnings, investors will be keen on the results and projections. The report will give an overview of the overall impacts of economic concerns on future Walmart’s sales. With the positive sentiment, earnings beat, and favourable guidance could boost the stock.
Potential earnings miss or weak guidance could result in a cliff fall for Walmart stock. The bear scenario considers that Walmart is trading at a record price. Earnings miss will also erode the sentiment developed after Walmart exceeded estimates in recent quarters.
Walmart’s technical outlook – will the bull momentum continue?
From a technical outlook, Walmart has maintained an uptrend. The stock overcame a crucial resistance at $152. The breach of the resistance sets the bar higher for the stock. The weekly chart and RSI show buyers dominate the stock. The stock is yet to hit overbought levels, meaning the strengths could continue. But is this sufficient to buy Walmart?
Walmart may face a bull-bear tussle
Walmart stock buyers would delight in the positive sentiment and expected favourable quarter results. However, it is too early to speculate if Walmart will continue enjoying strengths from a depressed economy. As such, it is crucial to consider investing in the stock after quarter results and guidance confirmations.
Also, the high valuation could deter new buyers, while potential profit-taking is a bear catalyst. Investors would be better off buying Walmart on a correction if the quarter results come strong.
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