Wal-Mart Stores, Inc. (NYSE: WMT)
On Tuesday before the market opened, Wal-Mart reported better than expected earnings and sales results for the company’s third quarter of fiscal 2016. The surprising results come while several other major retailers are reporting disappointing earnings. They also defy Walmart’s warning of lower earnings issued only one month ago.
Earnings
Walmart reported that U.S. comparable store sales were up 1.5%, marking the fifth consecutive quarter of growth. For the third quarter, Walmart reported earnings of $1.03 per fully diluted share versus consensus estimate of $0.98 per share. Consolidated revenue was down 1.3% year over year to $117.4 billion, but was within the range of company guidance and consensus estimates.
CEO Comments
In a company press release, Doug McMillon, Wal-Mart President and CEO, stated:
“We are pleased with the continued sales growth in Walmart U.S. and in our international business. Strong traffic and our fifth consecutive quarter of positive comps in Wal-Mart U.S. stores show we are taking the right steps to win with customers. Although we still have work to do, we are positioning for sustainable growth through investments in people and technology to deliver a seamless shopping experience at scale.” Business Wire
WMT Technical Analysis
Walmart hit all time highs of $90.97 this past January and has since been in a downtrend reaching a four-year low of $56.30 last Friday. Last week’s decline was driven by weak earnings reports of higher end retailers like Nordstrom and Macys. Beginning in late August, WMT appeared to have found a bottom near $63 finding support there for two months. However on October 14, the company lowered guidance sending the stock down another 10% on heavy volume. Tuesday saw the stock close above VWAP and the 9-day and 20-day exponential moving averages for the first time since the October selloff. The $60 area was an active level during Tuesday’s trading and is the first level of resistance going forward. Additional resistance levels sit near $60.20, $60.35 and $60.60. A move through Tuesday’s high of $60.90 could indicate trend reversal with room to get to back to $63. On the downside support is between $59.80 and $59.70. A break of this area could run to low of the day at $59.20. Below that the gap fills at $58.03
Wal-Mart Stores, Inc. Company Profile
Wal-Mart Stores, Inc. is engaged in the operation of retail, wholesale and other units in various formats around the world. The Company offers an assortment of merchandise and services at everyday low prices (EDLP). The Company’s operations are conducted in three segments: Walmart U.S., Walmart International and Sam’s Club. The Walmart U.S. segment operates retail stores in all 50 states in the United States, Washington D.C. and Puerto Rico, with three primary store formats, as well as digital retail. The Walmart International segment consists of operations in 26 countries outside of the United States and includes numerous formats divided into three main categories: retail, wholesale and other. The Sam’s Club consists of membership-only warehouse clubs and operates in 48 states in the United States and in Puerto Rico, as well as digital retail. Google Finance
