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Walmart stock analysis: Buy, Sell, or Hold in 2024?

Walmart stock analysis: Buy, Sell, or Hold in 2024?

In 2023, Walmart (NYSE: WMT), the retail giant, navigated a challenging business environment, with the company’s equity rallying by over 10%. 

The company reported noteworthy figures in its third-quarter report, including a 5.2% growth in revenue quarter-over-quarter from the previous quarter and earnings per share of $1.53, precisely matching analysts’ estimates.

As we move further into 2024, WMT appears to have shaken off an initial correction, rising toward the $160 mark and maintaining year-to-date gains of almost 1%.

WMT YTD stock price. Source: Finbold

Although WMT has been susceptible to overall market conditions, its ability to navigate last year’s environment has left investors pondering whether they should buy, sell, or hold its stock in 2024. This comes as Walmart prepares to release its earnings report on February 20.

Walmart’s bullish outlook

When looking at Walmart’s stock, the company has several key fundamentals likely to help the stock rally. Notably, Walmart has shown resilience in economic downturns because it focuses on recession-proof retail, particularly essentials like groceries and everyday items. 

This defensive strategy has proved successful; for instance, in Q3 2023, the company reported strong growth in groceries alongside health and wellness across its U.S.-based stores. Notably, the company has also effectively gained market share, especially in the grocery segment, by enticing higher-income consumers with delivery and pickup options. 

At the same time, Walmart’s transformation from a traditional brick-and-mortar giant to a formidable e-commerce player is evident. Fueled by strategic acquisitions like Flipkart and substantial investments in delivery and pickup services, the company has established a rapidly growing online platform. This omnichannel presence aligns with modern shopping habits, significantly expanding Walmart’s reach beyond physical stores. In this line, the e-commerce segment saw sales grow by 24%, led by pick and delivery during the third quarter of 2023.

Another potential for investing in Walmart is tied to its earnings outlook. Particularly, investing in stocks with improved earnings projections can be highly lucrative, as stock prices often react to such revisions. In this case, Walmart is poised for upward adjustments in future earnings estimates. This, in turn, has the potential to generate positive price momentum and boost investor interest.

With an impressive record of increasing dividends, Walmart is a dividend king in the retail sector. This consistent commitment to rewarding investors positions WMT as a reliable source of income alongside the potential for capital appreciation.

Bearish outlook 

On the other hand, Walmart faces its fair share of challenges that might impact the general retail sector. 

External factors, including high food inflation and a cautious consumer outlook, have the potential to impact discretionary spending, leading to increased markdowns and fewer impulse purchases.

Additionally, unforeseen deflation and expense headwinds pose risks that could affect profitability growth. 

Wall Street analysts take on WMT

Elsewhere, 29 Wall Street analysts have given WMT a ‘strong buy’ rating for the next 12 months. In this case, analysts over at Tipranks, basing their projection on the stock’s performance over the last three months, indicate that WMT is likely to rally with an average price target of $180.25. This represents an upside of about 12% from the current valuation. The analysts have also forecasted a high prediction of $210 and a low forecast of $163.

WMT Wall Street analysts 12-month forecast. Source: TipRanks

Although economic headwinds such as inflation will likely impact Walmart’s stock, it looks promising and worth buying in 2024 as its fundamentals remain strong.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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