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Walmart (WMT) Gains But Lags Market: What You Should Know

Walmart (WMT) closed at $134.25 in the latest trading session, marking a +1.3% move from the prior day. The stock lagged the S&P 500's daily gain of 3.06%. Meanwhile, the Dow gained 2.8%, and the Nasdaq, a tech-heavy index, added 0.18%.

Coming into today, shares of the world's largest retailer had lost 0.35% in the past month. In that same time, the Retail-Wholesale sector lost 6.55%, while the S&P 500 lost 6.15%.

Walmart will be looking to display strength as it nears its next earnings release. In that report, analysts expect Walmart to post earnings of $1.31 per share. This would mark a year-over-year decline of 9.66%. Our most recent consensus estimate is calling for quarterly revenue of $147.24 billion, up 4.78% from the year-ago period.

WMT's full-year Zacks Consensus Estimates are calling for earnings of $5.84 per share and revenue of $600.2 billion. These results would represent year-over-year changes of -9.6% and +4.79%, respectively.

Any recent changes to analyst estimates for Walmart should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.04% higher. Walmart is currently a Zacks Rank #2 (Buy).

In terms of valuation, Walmart is currently trading at a Forward P/E ratio of 22.69. Its industry sports an average Forward P/E of 10.83, so we one might conclude that Walmart is trading at a premium comparatively.

We can also see that WMT currently has a PEG ratio of 4.13. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Retail - Supermarkets was holding an average PEG ratio of 1.46 at yesterday's closing price.

The Retail - Supermarkets industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 56, which puts it in the top 23% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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