by Ian Harvey
February 19, 2020
Walmart reported Tuesday with fourth-quarter results that fell shy of expectations. The stock erased its premarket losses and was trading in the green by the afternoon.
Wal-Mart still remains "well-positioned" for 2020, and beyond, after heavy investments in its supply chain and distribution.
“Earnings Prediction Members” are now up 95% potential profits; and expiry of the option isn’t until March 20.
And, for those traders on the sidelines, there is still time to take advantage of this comeback!
Fourth-quarter earnings and revenue fell short, which Chief Executive Doug McMillon attributed to a variety of factors, including the shortened holiday shopping season, the shift to e-commerce and the lack of a hot toy.
“Walmart’s Q4 performance, which we characterize as tepid overall, indicates that the holiday season was if anything even more promotional than we anticipated, with its U.S. operating margin down around 75 basis points for the quarter, some of which was due to mix as lower margin food sales were strong while higher margin apparel was weak, some due to softness in key holiday categories such as toys, and some due to increased expenses around delivery,” said Charlie O’Shea, Moody’s lead Walmart analyst.
The Dow component Wal-Mart rose back above its 50-day moving average despite the weak quarterly report. Earnings for the holiday period were weaker than expected and same-store sales also missed views. Wal-Mart also gave disappointing profit guidance, yet shares rallied.
Walmart shares have now formed a base with a $125.48 buy point.
Time to execute an options call play!
YOU NEED TO BE IN TO PROFIT!
The Earnings In Brief.....
Wal-Mart’s adjusted earnings came in at $1.38 per share, falling short of the Consensus Estimate of $1.43.
Also, earnings dropped 2.1% year over year. This could be accountable to higher cost of sales as well as increased operating, selling, general and administrative expenses.
As well, the disruption in Chile and a legal matter affected the bottom line by around 5 cents.
Total revenues grew 2.1% to nearly $141.7 billion. The year-over-year upside was driven by growth in all segments. The Consensus Estimate was set at $142.4 billion.
Looking For A Trade On Wal-Mart.....
After a bit of weakness early on in the day, the stock has stayed above its annual value level at $116.42.
The stock ended last week at $117.89, down 0.8% year to date and in bull-market territory 22% above its 52-week low of $96.53 set March 28, 2019.
It’s 6% below its all-time intraday high of $125.38, set on November. 14.
“Overall, we think Walmart likely wasn’t immune from some of the near-term pressures like a shortened holiday season that impacted competitors such as Target during the holiday season,” wrote UBS analysts led by Michael Lasser.
“Still its early guidance leads us to believe that its current year-to-date performance in February has been strong and it’s well positioned to take further share.”
UBS rates Walmart stock neutral with a $125 price target.
Also, Jefferies analyst Christopher Mandeville rated Walmart stock as a buy with a $139 target heading into earnings.
"WMT's early investments in tech/ecommerce and practice of continued price investment, which benefits from the company's unmatched scale, have positioned it well for future share gains," he said in a Feb. 12 research note. "E-commerce initiatives, including expanding marketplace and additional delivery options should drive continued robust e-commerce growth; we are encouraged by WMT's testing of micro-fulfillment."
He also touted the firm's strategic investments in Flipkart, which he
said opens access to the rapidly growing market in India. He believes it should
yield a significant return in the future.
Join Us And See Our Next Walmart's Trade.....
Join us today and see what future trades will be recommended!
Our Trade and Potential Profits.....
As Walmart announced their earnings before trading yesterday, we were not able to enter the recommended trade until the market opened.
Within 10 minutes of opening Wal-Mart stock had dropped from $118.47 to $117.36. Therefore, our entry price of $2.20 was not applicable, instead dropping to a low of $1.20.
During the trading day this options call trade climbed as high as $2.34; making a potential profit of 95%.
In a quarter that’s all about boosting business by way of holiday shopping, it’s worth noting that Walmart’s e-commerce sales were up by 41% last quarter, more than the 35% in Q4.
Walmart remains "well-positioned" for 2020 and beyond after heavy investments in its supply chain and distribution, Strategic Resource Group managing director Burt Flickinger said.
Walmart's dominant market positioning remains unchanged.
Therefore, the questions remain.....
Is It Too Late To Get In On Walmart’s Options Trade?
How High Can The Stock Price Go?
Do You Wish To Be Part Of This Action?
For answers, join us here at Stock Options Made Easy, and get the full details on the next trade.
AS ALWAYS THE DECISION IS YOURS!
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!