The big story today is Walmart (WMT) lowering its 4th quarter earnings forecast from a range of $0.97-$1.01 to a range of $0.91-$0.94 due to below expectation sales and higher expenses at Sam’s Club and Walmart International – Walmart is a big member of the Dow which is why the Dow is underperforming the other indexes today. Note that Walmart US seems to be holding up just fine.
Investors, as usual, are overreacting, sending shares down almost 8% on pretty big volume – almost 80 million shares, the most since September 16, 2005, have traded hands so far today. With support at $50 and today’s big volume selloff, this strikes me as a pretty solid entry point.
I see nothing to worry about in their release. December same stores sales at US Walmart stores were up 1.9%. Walmart is still cheap at about 14 times next year’s earnings. I used today’s selloff to buy more.
For more on Walmart see:
“The Walmart Economy”, Top Gun FP, May 13, 2008
“Dan Gross: Tough Economy Is Walmart’s Sweet Spot”, Top Gun FP, February 27, 2008
Disclosure: Top Gun is long shares of Walmart (WMT).