Walmart (WMT) Stock Retreating After Amazon Offers Competing Delivery Service

NEW YORK (TheStreet) -- Shares of Walmart Stores Inc  (WMT) were retreating, lower by 0.29% to $74.97 in afternoon trading Thursday, as Amazon.com (AMZN) fights back in the ongoing online delivery war and offers free same-day delivery to its Prime members.

Earlier this month, Walmart revealed its plans to compete with Amazon by creating its own unlimited shipping program for a $50 annual fee, compared to Amazon Prime's $99 annual membership, according to Reuters.

Additionally, Google (GOOGL) recently started offering its express shopping option, letting retailers without same-day delivery options use its network in certain markets. The Google Express service costs $10 per month, or $95 a year.

This morning, Amazon upped the ante by saying it will offer free same-day shipping with an order of more than $35 for its Prime subscribers. The offer will be available for a limited time in some of its key markets. 

Previously, Amazon's quick shipping service cost $5.99 for same-day delivery for those who already paid for their Prime membership.

Bentonville, Ark.-based Walmart Stores operates retail and other stores in various formats, including membership clubs. The company operates through three business segments which consists of Walmart U.S., Walmart International and Sam's Club.

Separately, TheStreet Ratings team rates WAL-MART STORES INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate WAL-MART STORES INC (WMT) a BUY. This is driven by several positive factors, 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 reasonable valuation levels, 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 shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The debt-to-equity ratio is somewhat low, currently at 0.66, 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 0.19 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.8%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • In its most recent trading session, WMT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • WAL-MART STORES INC's earnings per share declined by 6.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, WAL-MART STORES INC increased its bottom line by earning $4.99 versus $4.86 in the prior year. For the next year, the market is expecting a contraction of 4.4% in earnings ($4.77 versus $4.99).
  • You can view the full analysis from the report here: WMT Ratings Report

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