Home Online Earning Who Said Retail Is Dead? Wal-Mart's Stock Just Hit A New Record High

Who Said Retail Is Dead? Wal-Mart's Stock Just Hit A New Record High

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RINCON, GA – NOVEMBER 11: Knowshon Moreno signing autographs with Walmart employees during the Sports Illustrated Kids and Capri Sun team up to celebrate being active in Rincon, GA on November 11, 2017. (Photo by Marcus Ingram/Getty Images for Sports Illustrated)

Wal-Mart Stores Inc., the world’s largest brick and mortar retailer, just gapped up to a new record high after reporting earnings. The company earned,&nbsp;$1.00 per share on revenue of $123.2 billion which beat the Street’s estimate for $0.97 per share on revenue of $121.1 billion. It also beat the earning’s whisper number of $0.99 per share.

For the past few years, retail stocks have been in a brutal bear market as shares of Amazon soared to record highs. To Wal-mart’s credit, they recognized the trend in online shopping and made a few strategic acquisitions including buying JET.com a few years ago to compete more effectively. The company also invested heavily in improving its online presence and offers very competitive (if not lower prices) to its online customers. These investments are paying off and it helped the stock soar to a fresh record high as we enter the busy Q4 holiday shopping season.&nbsp;&nbsp;The big lesson retailers can learn is to invest heavily in their online operation because, for today’s customer, that is just as important, or arguably, more important, than the traditional brick and mortar business.

What The Pros Are Saying:

Steven A. Gattuso CFA, CFP, CMA at Courier Capital, LLC said via email:

&quot;They are one of the few retailers with the scale and the supply chain/logistics infrastructure to compete with Amazon. With the recent purchases of Jet, Bonobos and Modcloth they have responded strategically to put more resources into their online presence. In addition, they have made investments in their own online offerings and physical changes in the stores to increase the visibility of the on-line presence pick-up process and make it easier for customers to obtain products ordered – sometimes in the same day with the free in-store pickup. It may take time for these strategic investments to be fully developed and pay dividends but Wal-Mart does have one inherent advantage that Amazon does not – location. The physical locations of the Wal-Mart stores mean that I can get my on-line order either same day or almost as quickly as Amazon would deliver. This advantage, together with little to no price difference, would be attractive to those customers who need their order quickly. Wal-Mart, already the largest grocer in terms of revenue, is also participating in new developments in grocery delivery and pick-up so there is no advantage to the Whole Food/Amazon or other local grocers in that area. With all of the positive news there are concerns going forward. The introduction of Amazon will put price pressure on Wal-mart and other retailers/grocers affecting earnings in the entire industry. Also, Wal-mart is susceptible to rising wage/benefit pressures with its large workforce but, given the company’s constant focus on cost containment they are in a position to respond to that challenge better than most.&quot;

Edward C. Murphy, Analyst, at the advisory firm FindLeadingStocks.com said:

&quot;It’s hard to believe that Wal-Mart is once again a leading stock. The stock continues to exhibit strong relative strength and act very well in a very difficult environment for retailers. Our hedge fund clients are largely bearish on this sector (retail stocks) so to see a big retailer hit a fresh 52-week high is going to attract a lot of new money back into this space.&quot;

Bottom Line:

It is very bullish to see Wal-Mart gap up after reporting earnings. Clearly, big investors are accumulating this stock and that bodes well for other retailers and the broader economy.

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RINCON, GA – NOVEMBER 11: Knowshon Moreno signing autographs with Walmart employees during the Sports Illustrated Kids and Capri Sun team up to celebrate being active in Rincon, GA on November 11, 2017. (Photo by Marcus Ingram/Getty Images for Sports Illustrated)

Wal-Mart Stores Inc., the world’s largest brick and mortar retailer, just gapped up to a new record high after reporting earnings. The company earned, $1.00 per share on revenue of $123.2 billion which beat the Street’s estimate for $0.97 per share on revenue of $121.1 billion. It also beat the earning’s whisper number of $0.99 per share.

For the past few years, retail stocks have been in a brutal bear market as shares of Amazon soared to record highs. To Wal-mart’s credit, they recognized the trend in online shopping and made a few strategic acquisitions including buying JET.com a few years ago to compete more effectively. The company also invested heavily in improving its online presence and offers very competitive (if not lower prices) to its online customers. These investments are paying off and it helped the stock soar to a fresh record high as we enter the busy Q4 holiday shopping season.  The big lesson retailers can learn is to invest heavily in their online operation because, for today’s customer, that is just as important, or arguably, more important, than the traditional brick and mortar business.

What The Pros Are Saying:

Steven A. Gattuso CFA, CFP, CMA at Courier Capital, LLC said via email:

“They are one of the few retailers with the scale and the supply chain/logistics infrastructure to compete with Amazon. With the recent purchases of Jet, Bonobos and Modcloth they have responded strategically to put more resources into their online presence. In addition, they have made investments in their own online offerings and physical changes in the stores to increase the visibility of the on-line presence pick-up process and make it easier for customers to obtain products ordered – sometimes in the same day with the free in-store pickup. It may take time for these strategic investments to be fully developed and pay dividends but Wal-Mart does have one inherent advantage that Amazon does not – location. The physical locations of the Wal-Mart stores mean that I can get my on-line order either same day or almost as quickly as Amazon would deliver. This advantage, together with little to no price difference, would be attractive to those customers who need their order quickly. Wal-Mart, already the largest grocer in terms of revenue, is also participating in new developments in grocery delivery and pick-up so there is no advantage to the Whole Food/Amazon or other local grocers in that area. With all of the positive news there are concerns going forward. The introduction of Amazon will put price pressure on Wal-mart and other retailers/grocers affecting earnings in the entire industry. Also, Wal-mart is susceptible to rising wage/benefit pressures with its large workforce but, given the company’s constant focus on cost containment they are in a position to respond to that challenge better than most.”

Edward C. Murphy, Analyst, at the advisory firm FindLeadingStocks.com said:

“It’s hard to believe that Wal-Mart is once again a leading stock. The stock continues to exhibit strong relative strength and act very well in a very difficult environment for retailers. Our hedge fund clients are largely bearish on this sector (retail stocks) so to see a big retailer hit a fresh 52-week high is going to attract a lot of new money back into this space.”

Bottom Line:

It is very bullish to see Wal-Mart gap up after reporting earnings. Clearly, big investors are accumulating this stock and that bodes well for other retailers and the broader economy.

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