Stocks

Walmart (WMT) Experiences Steeper Decline Than Market: Insights for Investors

Published January 3, 2025

In the latest trading session, Walmart (WMT) closed at $90, experiencing a decline of -0.39% from the previous trading day. This performance was notably worse than the broader market, as the S&P 500 registered a daily loss of 0.22%. Similarly, the Dow Jones Industrial Average fell by 0.36%, while the tech-focused Nasdaq dropped by 0.16%.

Over the past month, Walmart's stock has seen a substantial decrease of 4.34%. This decline is more pronounced compared to the Retail-Wholesale sector, which experienced a loss of 1.69%, and the S&P 500's overall loss of 2.36% during the same period.

Investors are keenly anticipating Walmart's forthcoming earnings report, scheduled for February 20, 2025. Analysts predict that the company will report earnings of $0.64 per share, reflecting a 6.67% improvement compared to the same quarter last year. Additionally, the consensus estimate anticipates revenue reaching $179.28 billion, indicating a 3.4% rise from the previous year.

For the full fiscal year, Zacks Consensus Estimates indicate that analysts forecast earnings of $2.47 per share and total revenues of $679.45 billion, showing growth of +11.26% and +4.83%, respectively, year-over-year.

Recently, there have also been noteworthy changes in analyst estimates for Walmart. Such revisions are often indicative of shifting short-term business trends, and positive alterations in these estimates can signal a favorable outlook on the company's operational health and profitability.

Research indicates a direct correlation between changes in earnings estimates and short-term stock performance. To harness this trend, the Zacks Rank system has been developed, which delivers a clear and actionable rating model based on estimate changes. The Zacks Rank ranges from #1 (Strong Buy) to #5 (Strong Sell), and it has demonstrated a strong historical performance, with #1 rated stocks producing an average annual return of +25% since 1988.

Currently, Walmart holds a Zacks Rank of #3 (Hold), indicating a neutral outlook.

From a valuation perspective, Walmart’s stock is trading at a Forward P/E ratio of 36.52, which is significantly higher than the industry average Forward P/E of 13.73.
Moreover, Walmart has a PEG ratio of 4.29. This ratio, which accounts for the expected earnings growth rate, provides further context to the company's valuation. For reference, the average PEG ratio within the Retail - Supermarkets industry is 2.11.

The Retail - Supermarkets industry is classified under the broader Retail-Wholesale sector, and it is currently ranked #153 within the Zacks Industry ranks, placing it in the lower 40% of over 250 industry classifications.

The Zacks Industry Rank evaluates the strength of various industry groups by analyzing the average Zacks Rank of the individual stocks therein. Historically, top-rated industries have outperformed those in the lowest quartile by a factor of two to one.

In the coming trading sessions, investors should keep an eye on these metrics regarding Walmart stock and its overall market impact.

Walmart, Stocks, Earnings