Walmart (WMT) is starting a holiday-shortened trading week with a bang. Shares are on the move after the company reported stronger-than-expected fourth-quarter earnings results. The retailer's other positive news and solid momentum are giving investors a breath of fresh air and shares are just a few dollars shy of their 52-week high of $106.21, closing up 2.2% to $102.20 on Tuesday.
Let's take a look at the charts to see if Walmart stock can challenge those highs in the not-too-distant future. Shares have been slowly but surely grinding higher, as evidenced by uptrend support line drawn in purple.
Ahead of the report, shares were flirting with a larger move, either to downtrend resistance (blue line) or its former high from January 2018 near $107. With Friday's close, shares pushed through that $98 to $100 area that was acting as resistance. A poor reaction to earnings would have negated that move. Instead, though, the post-earnings reaction is propelling WMT up to the two areas we just outlined, those being potential downtrend resistance and the prior highs.
Shares are beginning to enter a state of "overbought-ness," as indicated by the green circle on the Relative Strength Index. Historically speaking, that does not bode well for Walmart, although it can continue higher for longer before having an impact. Ultimately, it would be encouraging to see shares push through resistance and for that level to become support on a pullback.
If these levels act as resistance on the first try, look to see that ~$100 area act as support.
Earnings of $1.41 per share came in 8 cents a share ahead of consensus estimates and grew over 15% year-over-year, while group revenue of $138.8 billion also beat estimates and grew roughly 6% year-over-year. That's enough to put investors' fears to rest about how the holiday quarter went for Walmart.
However, there were other impressive notes to consider. The first, fourth-quarter comparable-store sales grew 4.2%. Not only did this easily top the consensus estimate of 3.3% but it was Walmart's best result in almost a decade. Operating income surged 36% to just over $6 billion while the company also upped its dividend to $2.12 per share annually from $2.08 per share. Walmart stock now yields just 2% per year.
Finally, the company reaffirmed its 2020 guidance. All in all, it was a strong quarter and the fundamentals are lining up with the technicals. Over $100, and Walmart stock looks good.