Wal-Mart ($WMT) is set to report its fourth quarter financial results before the bell on Thursday (2/17). Wal-Mart ($WMT) is the biggest retailer in the world and has recently announced that they will close is smallest Wal-Mart Express stores, plans to operate its own gas stations, and will launch a new mobile payment system. On Thursday we might see Wal-Mart ($WMT) post its first ever year-over-year decline in revenue in 25 years. Analysts and investors are expecting that increased competition form Amazon ($AMZN), smaller grocers and discount stores will decrease Wal-Mart’s dominance ($WMT). Wall Street is anticipating Wal-Mart ($WMT) to announce earnings of $ 1.43 per share and revenue of $ 130.76 Billion for the quarter.
We populated the SprinkleBit analyzer with Wal-Mart’s ($WMT) main competitors in the discount retail store industry to project how its financial fundamentals compare to its peers. Lets take a look at how Wal-Mart ($WMT) compare against Costco ($COST), Sears ($SHLD), Target ($TGT), and Price Smart ($PSMT). For this analysis we used EBITDA multiplies, revenue multiples, market cap to revenue and PE in order to see how Wal-Mart ($WMT) measures up against it peers. By running the fundamental measures in comparison to the companies mentioned, we received an implied share price of $ 78.66. With the current trading price of $ 66.12 (EOD 2/17) Wal-Mart ($WMT) is undervalued with 18.96%.
We also analyzed the technicals on the daily chart in order to see where the stock price could potentially move to on the release of earnings. With an entry price of $66.11 and a reported loss on earnings, the stock has the potential to fall to $ 64.80 for a 1.98% loss. With an entry price of $66.11 and a reported beat on earnings, the stock has the potential to rise to $ 68 for a 2.86% gain. The risk/reward ratio for this trade is 1.44.
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