Walmart Inc.Alış
WMT: Outlining a Long Strategy Through Earnings
Retail earnings season is upon us. So far, FactSet notes that 92% of the S&P 500 has reported Q3 results, and the total beat rate is strong at 81% - the highest since Q3 2021. What’s more, the blended EPS growth rate is now seen at +4.1% - the first positive YoY earnings growth rate quarter in a year. Analysts have turned more optimistic about how Q3 progressed, perhaps not surprising since last quarter’s GDP growth rate surged past most economists’ expectations from the summer.
All eyes are now on the consumer sectors. Major Staples and Discretionary names report Q3 profit figures this week and before Turkey Day next week. I'm going to home in on Walmart (WMT). The largest big-box retailer has been on an impressive uptrend, sharply outpacing the Consumer Staples sector and S&P 500 over the last year. Let’s check out the chart to see if more gains are ahead.
Overall, I like the trend and would prefer a long play into and through earnings. According to Option Research & Technology Services (ORATS), WMT is expected to move plus or minus 3.1% after reporting in the premarket on Thursday. With 20.4% implied volatility, the $447 billion market cap retailer has beaten bottom-line numbers in each of the previous 5 reports with shares trading higher post-earnings in 4 of the last 5 instances. Analysts expect $1.51 of operating EPS and there have been three analyst upgrades of earnings recently.
As for the chart, the uptrend is impressive. Shares are basically at all-time highs near $166 and the long-term 200-day moving average is positively sloped, indicating that the bulls are in charge. WMT has held that indicator line on a host of occasions since Q1 this year. What concerns me, though, is somewhat weaker RSI momentum readings as shares have marched higher - I would like to see momentum and price confirm each other to support a bigger and more sustained move up into year-end. For now, long with a stop under the early October low of $151 (and rising 200dma) appears as a favorable way to play it this week. Based on the $152 in October and call it $166 resistance, a bullish measured move upside price target is $180.
All eyes are now on the consumer sectors. Major Staples and Discretionary names report Q3 profit figures this week and before Turkey Day next week. I'm going to home in on Walmart (WMT). The largest big-box retailer has been on an impressive uptrend, sharply outpacing the Consumer Staples sector and S&P 500 over the last year. Let’s check out the chart to see if more gains are ahead.
Overall, I like the trend and would prefer a long play into and through earnings. According to Option Research & Technology Services (ORATS), WMT is expected to move plus or minus 3.1% after reporting in the premarket on Thursday. With 20.4% implied volatility, the $447 billion market cap retailer has beaten bottom-line numbers in each of the previous 5 reports with shares trading higher post-earnings in 4 of the last 5 instances. Analysts expect $1.51 of operating EPS and there have been three analyst upgrades of earnings recently.
As for the chart, the uptrend is impressive. Shares are basically at all-time highs near $166 and the long-term 200-day moving average is positively sloped, indicating that the bulls are in charge. WMT has held that indicator line on a host of occasions since Q1 this year. What concerns me, though, is somewhat weaker RSI momentum readings as shares have marched higher - I would like to see momentum and price confirm each other to support a bigger and more sustained move up into year-end. For now, long with a stop under the early October low of $151 (and rising 200dma) appears as a favorable way to play it this week. Based on the $152 in October and call it $166 resistance, a bullish measured move upside price target is $180.
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