NEW YORK (TheStreet) -- Walmart
(WMT - Get Report) shares were downgraded to "underperform" from "market perform" by analysts at William Blair on Tuesday.
Walmart is down -0.5% to $77 in pre-market trading today.
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The firm cites e-commerce competition and a market shift away from big box retailers as a reason for the downgrade.
"We have reduced our rating on Wal-Mart to Underperform. Our main concerns are Wal-Mart's size and complexity, which reduces dynamism and growth; incremental risks with e-commerce competition, particularly as Wal-Mart's large stores are less favorably positioned for a consumer who is increasingly buying individual items online; and the prospect of sector rotation away from retailers at this stage of the economic cycle" William Blair said in a research note to clients," analysts said in their note.
- WMT's revenue growth has slightly outpaced the industry average of 6.4%. Since the same quarter one year prior, revenues slightly increased by 1.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has slightly increased to $9,937.00 million or 2.61% when compared to the same quarter last year. In addition, WAL-MART STORES INC has also modestly surpassed the industry average cash flow growth rate of -7.09%.
- WAL-MART STORES INC's earnings per share declined by 19.8% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, WAL-MART STORES INC reported lower earnings of $4.86 versus $5.01 in the prior year. This year, the market expects an improvement in earnings ($5.30 versus $4.86).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Food & Staples Retailing industry and the overall market, WAL-MART STORES INC's return on equity exceeds that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: WMT Ratings Report