Walmart Share Price Forecast December 2021 – Time to Buy WMT?
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Shares of American multinational retail corporation Walmart (NYSE: WMT) have closed on $139.62 as of December 21st (19:57 EST). Walmart has beat estimates and raised guidance in its Q3 report and is well-positioned for the holidays with inventory up over 11%.
Walmart – Technical Analysis
According to the financial statement released by Walmart, the market cap of the company is at $386.124 billion with total assets worth $244.851 billion. Revenue for 2020 was at $559.15 billion with a profit margin of 2.42% compared to $523.96 billion in 2019.
Oscillators such as Relative Strength Index (14)(44.31), Stochastic %K (14, 3, 3)(35.00), Commodity Channel Index (20)(−31.23), Average Directional Index (14)(23.68) and Awesome Oscillator(−1.83) are neutral. Moving averages such as Exponential Moving Average (10)(140.91), Simple Moving Average (10)(141.19), Exponential Moving Average (20)(141.54), Simple Moving Average (20)(141.00) and Exponential Moving Average (30)(142.16) are indicating a sell action.
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Recent Developments
As mentioned before Walmart’s Q3 results revealed a couple of robust statistics such as a 9% comparable-store sales growth and two-year sales gains speeding up to 15.6% from 14.5% in the prior quarter. Its main growth came from rising customer traffic, in contrast to other retailers who reported earnings recently. It also recorded a 6% increase in transaction volume and a 3% boost in average spending.
Walmart’s ROIC or return on invested capital is also in a strong position which jumped to 14.5% from 13.7% as a result of several encouraging financial trends including rising earnings and a falling share count. Apart from benefiting from accelerating investments into the business, Walmart has also ramped up its buyback spending to over $7 billion so far in fiscal 2022. These include bets in high-growth areas like data services and subscription services.
Walmart also recorded a 5% increase in the core U.S. market over the holiday season. This can translate to an additional $30 billion to its annual sales footprint this year on top of surging gains in 2020. Given the accelerating demand trends and the supply chain challenges, the increase in inventory of 12% year over year indicates that the company will have a strong Q4.
Should You Buy WMT Shares?
Walmart’s earnings outlook has strengthened though investors have largely shunned the company. Analysts are predicting adjusted earnings of $6.41 a share for the current fiscal year which is 64 cents more than they predicted a year ago. Estimates for the next fiscal year also increased 50 cents a share. Walmart shares are cheaper than before as investors were willing to buy Walmart shares for more than 25 times blended forward 12-months earnings a year ago, which is now less than 22.
Walmart has experienced several headwinds such as the global supply-chain squeeze to the winding down of the U.S. government’s pandemic-era stimulus programs. But it does have its own problems. The company is known for keeping working hours under the full-time minimum to avoid paying benefits and fighting the $15 minimum wage. With competitors boosting pay and benefits, Walmart will certainly have to tackle this problem head-on.
Walmart shares have lost 1.9% against its competitor Zacks Supermarkets industry’s gain of +0.7%. The company is slowly starting to gain from its sturdy comp sales record, driven by its constant omnichannel efforts. WMT has also countered inflationary pressures by building up a strong inventory position, increased contributions from advertising revenues and lower markdowns. Considering this, you can easily pick up WMT shares.
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