NEW YORK (TheStreet) -- Shares of Walmart Stores Inc (WMT) were edging higher, up 0.3% to $73.28 in early market trading Monday, after analysts at Raymond James raised their rating on the big box retailer to a "strong buy" from an "outperform" rating on a valuation call this morning.
The firm issued an $86 price target, saying the retailer offers more reward than risk at its current levels.
Raymond James thinks the company's investments in its U.S. stores will start to pay off in the near future.
Bentonville, Ark. -based Walmart Stores operates retail and other stores in various formats, including membership clubs.
The company operates through threebusiness 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 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 reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."
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.
- 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).
- The gross profit margin for WAL-MART STORES INC is currently lower than what is desirable, coming in at 26.70%. Regardless of WMT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.90% trails the industry average.
- You can view the full analysis from the report here: WMT Ratings Report