TheStreet Ratings quantitative stock model maintains a Buy recommendation on Walmart (WMT) - Get Walmart Inc. Report . Since the stock was upgraded to Buy from Hold on Feb. 22, 2017, the shares have climbed by as much as 40% in value.
If you prefer exchange-traded funds to holding individual stocks, you may want to consider funds with a large percentage of holdings concentrated in Walmart stock. The three funds holding the highest concentration of Walmart shares are all rated at Hold: Consumer Staples Select Sector SPDR (XLP) - Get Consumer Staples Select Sector SPDR Fund Report rated at C+ with 8.2%, Vanguard Consumer Staples ETF (VDC) - Get Vanguard Consumer Staples ETF Report rated at C+ with 7.1%, and Invesco Dynamic Retail (PMR) - Get Invesco Dynamic Retail ETF Report rated at C with 5.0%. The best rated concentrated holders of Walmart are Oppenheimer S&P 500 Revenue (RWL) - Get Invesco S&P 500 Revenue ETF Report rated at B+ with 4.8% and Schwab US Dividend Equity ETF (SCHD) - Get Schwab US Dividend Equity ETF Report rated at A with 4.5%.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate WALMART INC as a Buy with a ratings score of B. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the analysis by TheStreet Ratings goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 10.8%. Since the same quarter one year prior, revenues slightly increased by 4.4%. 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.
- The debt-to-equity ratio is somewhat low, currently at 0.61, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.15 is very weak and demonstrates a lack of ability to pay short-term obligations.
- WALMART INC's earnings per share declined by 28.0% 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 two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, WALMART INC reported lower earnings of $3.27 versus $4.39 in the prior year. This year, the market expects an improvement in earnings ($4.86 versus $3.27).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Food & Staples Retailing industry. The net income has significantly decreased by 29.8% when compared to the same quarter one year ago, falling from $3,039.00 million to $2,134.00 million.
- You can view the full analysis from the report here: WMT
-- Reported by Kevin Baker in Palm Beach Gardens, FL
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet, Inc. or any of its contributors