“Relative to peers, we are impressed by Walmart's positioning,” MKM analyst Bill Kirk wrote in a commentary. He cited these areas:
“1) better inventory levels heading into the holidays (up 11% year on year);
2) best progress toward building a subscription model (Walmart+);
3) developing third-party marketplace and endless aisle;
4) two-year stacked trends accelerating, where others are stagnant;
5) best positioned should the consumer become more price discerning due to energy and food inflation; and
6) most able to extract ad dollars from consumer-packaged goods companies, whom we expect to become increasingly promotional.”
Walmart recently traded at $143.80, up 0.45%. It has slumped 4% over the past three months.
Despite all the good tidings, “Walmart's shares have languished (down 2% year to date, versus up 25% for the S&P 500 and up 30% for the immediate peer group),”Kirk noted.
“Walmart is trading at just around 20% above pre-Covid levels, while much of the peer group has more than doubled. With price investments made and assortment under control, we believe Walmart will win the holidays and continue to gain share in 2022.”
Morningstar analyst Zain Akbari noted Walmart’s strong earnings report in a commentary Tuesday.
While, “we believe the updraft is temporary, … our near-term estimates should rise. As a consequence, and to reflect the time value of money, we expect to lift our $136 fair value estimate by a mid-single-digit percentage,” he said.
But, “We still suggest investors await a more attractive entry point.”