Walmart (NASDAQ:WMT) Shares Gap Down - Time to Sell?

Key Points

• Walmart beat Q1 expectations, reporting EPS of $0.66 on revenue of $177.75 billion, with sales up 7.4% year over year. The company also saw strong growth in higher-margin businesses, including 26% global e-commerce growth and a 37% jump in advertising revenue.
• The stock fell sharply despite the strong quarter because management’s current-quarter and full-year guidance came in below Wall Street estimates. Shares gapped down and were trading about 7% lower as investors focused on the softer outlook.
• Rising fuel costs are adding pressure to Walmart’s margins, and management warned they could force higher store prices if they persist. Analysts still broadly rate the stock a Buy, with an average price target of $138.88.

Walmart Inc. (NASDAQ:WMT - Get Free Report)'s share price gapped down prior to trading on Thursday . The stock had previously closed at $130.85, but opened at $124.41. Walmart shares last traded at $121.7970, with a volume of 12,748,674 shares.

Key Stories Impacting Walmart

Here are the key news stories impacting Walmart this week:

• Positive Sentiment: Walmart beat expectations on quarterly EPS and revenue, with earnings of $0.66 per share and revenue of $177.75 billion, while sales rose 7.4% year over year. Walmart earnings release and conference call
• Positive Sentiment: Global e-commerce sales jumped 26%, advertising revenue rose 37%, and membership fee revenue increased 17.4%, showing continued strength in higher-margin growth businesses. Walmart revenue growth press release
• Neutral Sentiment: Analysts have recently highlighted Walmart’s strong e-commerce momentum and defended the long-term outlook, which helped keep sentiment constructive heading into the report. Walmart looks strong ahead of Q1 earnings
• Negative Sentiment: Despite the beat, Walmart’s current-quarter and full-year guidance came in below Wall Street expectations, overshadowing the strong quarter and pressuring the stock. Walmart shares drop as cautious outlook disappoints
• Negative Sentiment: Management said high fuel costs are hurting profits and may force higher store prices if they stay elevated, raising concerns about margins and consumer spending. Walmart higher prices if fuel costs stay elevated
• Negative Sentiment: The company’s FY2027 EPS guidance of 2.750-2.850 and Q2 EPS guidance of 0.720-0.740 both trailed consensus, reinforcing worries that near-term earnings growth may be softer than expected.

Analyst Ratings Changes

Several equities research analysts have commented on WMT shares. Weiss Ratings reiterated a "buy (b)" rating on shares of Walmart in a research report on Monday, April 20th. HSBC cut shares of Walmart from a "buy" rating to a "hold" rating and boosted their price target for the stock from $122.00 to $131.00 in a research report on Friday, February 20th. Argus upgraded shares of Walmart to a "strong-buy" rating in a research report on Wednesday, February 18th. BTIG Research boosted their price target on shares of Walmart from $140.00 to $145.00 and gave the stock a "buy" rating in a research report on Wednesday, May 6th. Finally, Craig Hallum set a $150.00 price target on shares of Walmart in a research report on Friday, March 6th. Two analysts have rated the stock with a Strong Buy rating, thirty have assigned a Buy rating and two have given a Hold rating to the company. According to MarketBeat.com, Walmart presently has an average rating of "Buy" and an average price target of $138.88.

Walmart Trading Down 7.0%

The firm has a market cap of $969.81 billion, a P/E ratio of 44.36, a PEG ratio of 4.96 and a beta of 0.65. The company has a 50 day moving average of $126.91 and a 200 day moving average of $119.89. The company has a debt-to-equity ratio of 0.38, a quick ratio of 0.24 and a current ratio of 0.79.

Walmart (NASDAQ:WMT - Get Free Report) last announced its quarterly earnings results on Thursday, May 21st. The retailer reported $0.66 EPS for the quarter, beating the consensus estimate of $0.65 by $0.01. The business had revenue of $177.75 billion during the quarter, compared to analysts' expectations of $174.84 billion. Walmart had a return on equity of 21.44% and a net margin of 3.07%.The firm's quarterly revenue was up 7.4% compared to the same quarter last year. During the same quarter in the previous year, the business posted $0.61 EPS. Walmart has set its FY 2027 guidance at 2.750-2.850 EPS and its Q2 2027 guidance at 0.720-0.740 EPS. Analysts predict that Walmart Inc. will post 2.89 EPS for the current fiscal year.

Insider Activity

In other news, EVP John D. Rainey sold 20,000 shares of the stock in a transaction that occurred on Monday, March 2nd. The stock was sold at an average price of $127.79, for a total value of $2,555,800.00. Following the completion of the sale, the executive vice president directly owned 486,764 shares of the company's stock, valued at approximately $62,203,571.56. This represents a 3.95% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. Also, EVP Christopher James Nicholas sold 2,900 shares of the stock in a transaction that occurred on Thursday, April 16th. The shares were sold at an average price of $124.72, for a total value of $361,688.00. Following the completion of the sale, the executive vice president directly owned 596,008 shares of the company's stock, valued at $74,334,117.76. This represents a 0.48% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last ninety days, insiders have sold 154,065 shares of company stock valued at $19,281,401. Insiders own 0.10% of the company's stock.

Institutional Investors Weigh In On Walmart

Hedge funds have recently modified their holdings of the business. Fox Run Management L.L.C. acquired a new position in shares of Walmart during the 3rd quarter worth about $1,709,000. Van ECK Associates Corp raised its position in shares of Walmart by 2.9% during the 3rd quarter. Van ECK Associates Corp now owns 1,010,886 shares of the retailer's stock worth $104,182,000 after purchasing an additional 28,026 shares during the last quarter. Tennessee Valley Asset Management Partners raised its position in shares of Walmart by 466.6% during the 3rd quarter. Tennessee Valley Asset Management Partners now owns 13,343 shares of the retailer's stock worth $1,375,000 after purchasing an additional 10,988 shares during the last quarter. Florida Trust Wealth Management Co raised its position in shares of Walmart by 7.0% during the 4th quarter. Florida Trust Wealth Management Co now owns 196,648 shares of the retailer's stock worth $21,909,000 after purchasing an additional 12,794 shares during the last quarter. Finally, Pensionfund Sabic acquired a new position in shares of Walmart during the 4th quarter worth about $4,378,000. 26.76% of the stock is owned by institutional investors.

About Walmart

Walmart is a multinational retail corporation that operates a broad portfolio of store formats and digital services. Its core business includes large-format supercenters, discount department stores, neighborhood grocery stores and a membership warehouse chain, Sam’s Club. The company’s merchandising mix covers groceries, household goods, apparel, electronics and pharmacy services, supplemented by private-label products and category-specific offerings. Walmart pairs its physical store network with online platforms and mobile applications to provide omnichannel shopping, fulfillment and delivery options for consumers and businesses.

The company was founded by Sam Walton, who opened the first store in Rogers, Arkansas in 1962; it is headquartered in Bentonville, Arkansas.

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