Should I buy Walmart shares after Q3 results?

Walmart Inc (NYSE: WMT) shares have weakened more than 2% this Tuesday, even though the company reported strong third-quarter results. Momentum continues with strong sales and profit growth in each company segment despite the various industry challenges.

Momentum remains strong

Walmart reported strong third-quarter results this Tuesday; total revenue has increased by 4.3% Y/Y to $140.5 billion, $6.34 billion above expectations, while the Non- GAAP earnings per share were $1.45 (beats by $0.06).

Walmart U.S. comp sales grew 9.2% in the third quarter, eCommerce sales had increased 8% compared with strong sales gains last year, and the company has achieved strong market share gains in grocery. Brett Biggs, CFO of Walmart, added:

Walmart’s U.S. comp sales momentum remains strong at 15.6% on a 2-year stack to impart the strong U.S. consumer spending and some inflation. Strength in China, Mexico, and India led to international sales growth of more than 10 % in constant currency.

The retail market continues to improve based on positive consumer behavior trends, which are seen to recapture the share lost to conventional grocers during the pandemic.

Walmart repurchased $2.2 billion of stock during the third quarter and $7.4 billion year-to-date, which is significantly more than last year. Walmart’s 1.5% dividend looks safe, and the board of directors is taking action to protect profitability from inflation.

The company’s management expects U.S. comp sales growth in the fourth quarter around 5%, while the adjusted earnings per share for the full 2021 fiscal year should be around $6.40. Bank of America has a buy rating on Walmart shares and a price objective of $190 per share following a strong quarterly report.

According to Bank of America, Walmart is very well-positioned for the holiday quarter and continues to support stronger inventory positioning and the ability to mitigate cost pressure vs. smaller peers amidst supply chain and labor disruption issues.

$140 represents the strong support

Walmart’s stock price has fallen more than 5% after reaching the highest level in November 2021 of $152, and for now, bears remain in control of the price action.

Walmart shares are trading at monthly lows, and if the price falls below $140 support, the next target could be $135.

On the other side, if the price jumps above $150 resistance, it would signal trading shares, and the next target could be at $155 or even above.

Summary

Walmart reported strong third-quarter results this Tuesday, and the company’s management expects U.S. comp sales growth in the fourth quarter around 5%. Bank of America has a buy rating on Walmart shares and a price objective of $190 per share following a strong quarterly report.