WMT Earnings Preview


I have owned Walmart (WMT) for a couple years now. Everything was going smoothly until a year ago when it reported a bad quarter and the stock got smashed. (You can clearly see the selloff in the chart above). What did I do? I bought more.

WMT now makes up ~7% of Top Gun’s long/short portfolios. My average price is $140 and it closed Friday at $154. It pays a 1.49% dividend.

I’m looking at the stock this morning heading into earnings next Thursday morning. Last quarter, WMT guided current year EPS to $5.90-$6.05. At the midpoint that equates to a 25.6x multiple at the current price. Not cheap.

But WMT is the essential consumer staples go to for the majority of middle class and lower middle class Americans because of its low prices. If the economy is going through a rough spell, that means the cycle is also in favor of WMT as more consumers will shift down.

So while I don’t see a great edge in WMT, I think the stock continues to make steady progress higher of 10-12%/year and I’m happy to hold on for that. There’s always the temptation to try to hit home runs but singles get the job done with a lot less risk.

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