WMT Craters After Earnings Beat

[View in browser]( [The Spill Logo] Proprietary Data Insights Financial Pros’ Top Discount Store Stock Searches in the Last Month Rank Name Searches #1 'Target Corp 146 #2 'Wal-Mart Stores 112 #3 'Costco Wholesale 65 #4 'Dollar General Corp 43 #5 'Dollar Tree Inc 7 #ad [It's time you learn about Alternative Investments!]( Brought to you by [Widemoat Research]( [The “Amazon Secret Royalty Program” Can Help Anyone Retire Like Royalty]( [Widemoat Research - The “Amazon Secret Royalty Program” Can Help Anyone Retire Like Royalty]( A unique type of investment could help you make more money than you will need for the rest of your life. It’s what we call the “Amazon secret royalty program.” It’s an income stream that allows you to collect $1,000s… $10,000s… or more every year! In fact, Business Insider says this type of investment could provide “enough money to live off of each year, without having any other retirement plan...” [Learn how to collect your first payout before June 13th.]( Financial Pros Question WMT Walmart (WMT) reported pretty solid numbers last week. Same store sales were up, along with ticket growth, as the company beat earnings and revenue estimates. Yet, shares cratered last Thursday, with many blaming the retailer. While the earnings were certainly positive, we think the stock is still overvalued on a relative basis, and due for a reckoning. Walmart’s Business Did you know that Walmart is the largest food distributor in the world? The owner of Walmart stores, Sam’s Clubs, and several other niche chains, is also the world’s largest company by revenue, largest private employer with 2.1 million employees, and serves nearly 270 million customers every week in 24 countries. To keep things simple, the company breaks revenues down by Walmart U.S. (65% of sales), Walmart International (23% of sales), and Sam’s Club (12% of sales). As noted earlier, the latest quarterly results were excellent: - Comp sales increased by 5.2% driven by a 6.1% traffic growth. - E-commerce sales grew by 6%. - Sam's Club comp sales group by 7.7%. - Operating income increased by 21%. - Free cash flow increased by $4 billion to $14 billion a YTD. However, not everything was fabulous: - Gross margins slid 0.66% due to higher transport costs and shrinkage. - Comp sales for international dropped 15% while operating income dropped by 8%. Despite forecasts for 4.5% sales growth this year, the company expects operating income to decline by 11% to 13% driven by inflation, competition, and higher transport costs. Financials [Financials] Source: Stock Analysis We’ve been surprised at how consistent Walmart has driven revenue growth for a company of a size. Well, it’s not a double digit gainer, it hasn’t had negative revenue growth for almost a decade. Unfortunately, inflation has eaten into gross margins by almost a full percentage point which is meaningful on a high-volume low margin business. While this dropped through to operating margin, the company has done a good job at the corporate level to improve profit margins. The company also has a surprisingly low amount of debt with just $60 billion. And even with almost $20 billion a year in capital expenditures, the company still generates an enormous amount of free cash flow, and a little more than $37 billion in cash from operations. Plus management is quite generous with dividends, and share buybacks. Valuation [Valuation] Source: Stock Analysis Our biggest problem with Walmart is the same across most discount retailers - high valuations. Target (TGT) and Dollar General (DG) are the cheapest PE ratios. And TGT tree did a reasonable price the cash flow ratio. But we can’t look at any of these low revenue growth, low margin companies and say they are worth buying. Growth [Growth] Source: Seeking Alpha Besides WMT, DG, Costco (COST) and Dollar Tree (DLTR) saw fantastic sales growth last year. And all are forecasting the same this year. Yet any whiff of a recession could make these numbers obsolete. Profitability [Profit] Source: Seeking Alpha It’s worth noting that although the deep discount retailers have higher margins, they are more exposed to consumer sentiment changes. That said, although Walmart’s margins might look bad, they still have one of the best free cash flow margins of the group. [[FREE REPORT] What Investors Are Searching]( Once every quarter, we compile millions of Financial Professional and Retail Investor's stock searches across our 100+ financial sites. We reserve this exclusive report for our newsletter subscribers so you can learn about the stocks and industries that you should keep an eye on. This info can help you decide what to do in your portfolio – so you can protect the money you have and generate bigger gains. [Click here now to download the FREE Trackstar Q1 2023 Report.]( Our Opinion 5/10 New investor is going to lose a ton of money betting on Walmart. However, there are better times than others to take a stab. We would prefer to wait until valuations Trail historic norms before taking a position. [-facebook-share]( [-twitter-share]( [-linkedin-share]( [-email-share](mailto:?body= %3Cbr+%2F%3E%0A%3Cb%3EFatal+error%3C%2Fb%3E%3A++Uncaught+Error%3A+Cannot+use+object+of+type+stdClass+as+array+in+%2Fvar%2Fwww%2Fhtml%2Fnl_forms%2Fsrc%2FICTheSpill%2Fautomate-ic-article.php%3A45%0AStack+trace%3A%0A%230+%2Fvar%2Fwww%2Fhtml%2Fnl_forms%2Fsrc%2FICTheSpill%2Fautomate-ic-article.php%28142%29%3A+get_duplicate_article_id%28%29%0A%231+%7Bmain%7D%0A++thrown+in+%3Cb%3E%2Fvar%2Fwww%2Fhtml%2Fnl_forms%2Fsrc%2FICTheSpill%2Fautomate-ic-article.php%3C%2Fb%3E+on+line+%3Cb%3E45%3C%2Fb%3E%3Cbr+%2F%3E?utm_medium=ic-nl&utm_source=112074 ) News & Insights Just Spilled - [Financial Pros Top Stock Search]( - [Become a better investor in just 5 minutes a day]( - [The Surprising Bank Financial Pros Picked]( - [TWLO – Fin Pros Might Be On To Something]( [News & Insights-facebook-share]( [News & Insights-twitter-share]( [News & Insights-linkedin-share]( [News & Insights-email-share](mailto:?body= %3Cbr+%2F%3E%0A%3Cb%3EFatal+error%3C%2Fb%3E%3A++Uncaught+Error%3A+Cannot+use+object+of+type+stdClass+as+array+in+%2Fvar%2Fwww%2Fhtml%2Fnl_forms%2Fsrc%2FICTheSpill%2Fautomate-ic-article.php%3A45%0AStack+trace%3A%0A%230+%2Fvar%2Fwww%2Fhtml%2Fnl_forms%2Fsrc%2FICTheSpill%2Fautomate-ic-article.php%28142%29%3A+get_duplicate_article_id%28%29%0A%231+%7Bmain%7D%0A++thrown+in+%3Cb%3E%2Fvar%2Fwww%2Fhtml%2Fnl_forms%2Fsrc%2FICTheSpill%2Fautomate-ic-article.php%3C%2Fb%3E+on+line+%3Cb%3E45%3C%2Fb%3E%3Cbr+%2F%3E?utm_medium=ic-nl&utm_source=112074 ) [We want to hear from you. Let us know your thoughts by clicking here]( [Ads] [InvestingChannel Logo](#) Follow us on: [Facebook Logo]( [LinkedIn Logo]( [Twitter Logo]( [Instagram Logo]( To ensure delivery of all emails, [allow us on your list](. Manage your subscriptions with our [preference center](. [Unsubscribe here.]( View our privacy policy [here](. Copyright ©2023 InvestingChannel. All rights reserved. 1325 Avenue of the Americas, Floor 27 & 28 New York, New York 10019 Disclaimer: This is not investment advice. This InvestingChannel, Inc., newsletter is for information purposes only and is based on opinion. Futures, forex, stock, and options trading are not appropriate for all investors. There is a substantial risk of loss associated with trading these markets. Losses can and will occur. No system or methodology has ever been developed that can ensure returns or eliminate losses. InvestingChannel, Inc., makes no representation or implication that using any of the methodologies or systems in this newsletter will generate returns or insure against losses. Investors should be cautious about any and all investments and are advised to conduct their own due diligence prior to making any investment decisions. [Link](