Walmart stock price analysis after its earnings report: buy or sell?

Walmart stock price popped by over 6.5% on Thursday as investors reacted to its strong earnings report. WMT jumped to $107, its highest level since October 25, and a few points below the all-time high of $110. 

Walmart’s business is booming 

Walmart, the biggest retailer in the United States, announced strong financial results, helped by its e-commerce and advertising business.

The company’s revenue jumped by 5.8% in the third quarter to $179.5 billion, higher than what analysts were expecting. Its e-commerce business rose by 27%, while the advertising segment soared by 53%.

Walmart US’s revenue rose by 5.1% to $120 billion, with most of the growth coming from its e-commerce business and its other key divisions like grocery, health & wellness, and general merchandise.

Its international business also continued thriving in the last quarter, with its revenue surging by 10% to $33.5 billion. The growth was mostly because of its Flipkart business.

These results showed that the company’s business continued to thrive during the new normal of Donald Trump’s tariffs. He has added a minimum tariff of 15%, with some countries like South Africa, Brazil, and India paying a higher levy.

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Historically, Walmart has navigated major crises well because of its scale and regional presence. Its scale makes it easier to negotiate with its suppliers. It is also beloved by customers because it is usually cheaper than other companies. 

Walmart’s management believes that its business will continue doing well in the coming months. The average estimate is that its annual revenue will be $674.5 billion, higher than the $448 billion it made last year.

Its adjusted operating income is expected to come in at $29.5 billion. However, analysts believe that its annual revenue will be higher than the guidance. According to Yahoo Finance, the average estimate is that its annual revenue will be $704 billion followed by $737 billion in the next financial year.

Analysts are also upbeat about its profitability, with the annual EPS expected to move to $2.61 this year and $2.94 in 2026.

This growth explains why analysts have a bullish outlook for the company. The average estimate among analysts is $114, up slightly from the current $107. 31 analysts have a buy target and 9 have a strong buy rating.

Still, the main risk for Walmart is that it is not a cheap company. Its forward price-to-earnings ratio has moved to 36, much higher than the retail sector median of 17 and the five-year average of 29. 

Walmart’s forward PE ratio based on non-GAAP numbers is 38, up from its five-year average of 27. This premium valuation is because Walmart is on a level of its own in the retail industry. It is also an all-weather company that does well in all market conditions.

Walmart stock price technical analysis 

The daily timeframe chart shows that the WMT stock price has been in a strong uptrend in the past few months, moving from a low of $79.67 in April this year to the current $107’

It has moved above the important resistance level at $104.50, its highest level in February, August, and September. It has moved above the upper side of the ascending triangle, a popular continuation pattern.

Walmart stock has remained above the 50-day and 100-day Exponential Moving Averages (EMA). Therefore, the most likely scenario is where it continues rising as bulls target the key resistance level at $110. A move above that level will point to more upside, potentially to $115. A move below the support at $105 will invalidate the bullish outlook.

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