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Is it time to invest in Walmart shares after raising FY2021 guidance?

By:
on Nov 17, 2021
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  • Walmart shares on Tuesday declined by 2.90% despite reporting solid FQ3 results.
  • The company announced its most recent quarterly results before markets opened, beating analyst expectations.
  • Walmart also raised its FY2021 guidance on EPS above the consensus Street forecast.

On Tuesday, Walmart Inc. (NYSE:WMT) shares declined by nearly 3% despite posting better-than-expected fiscal third-quarter results. The company announced its most recent quarterly revenue and earnings before markets opened, beating the consensus for analyst expectations. Walmart also raised its FY2021 earnings guidance above the average Street forecast.

The company posted FQ3 non-GAAP earnings per share of $1.45, beating the consensus for analyst estimates of $1.39. On the other hand, its GAAP EPS of $1.11 missed the expectation of $1.40, while revenue for the quarter surged by 4.3% from the same period a year ago to $140.3 billion, surpassing expectations by $6.34 billion.

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Walmart also raised its FY2021 earnings per share guidance to about $6.40 from $6.20-$6.35, exceeding the consensus for Street forecast of $6.32.

Is it time to buy or sell WMT shares?

From an investment perspective, Walmart shares trade at a reasonable forward P/E ratio of 21.55, making it an interesting option for value investors.

In addition, although analysts expect its earnings per share to decline by 8.5% this year, they also forecast average annual growth of about 8.12 for the next five years. 

Therefore, Walmart stock could also gain the attention of long-term investors.

Source – TradingView

Technically, Walmart shares seem to have recently pulled back to complete a downward breakout from an ascending channel formation. As a result, the stock has plummeted to trade below the 100-day moving average.

However, with shares approaching oversold conditions, it could be time to target rebound profits. Therefore, investors could target potential rebounds at about $145.57, or higher at $149.09, while $139.75 and $135.79 are crucial support levels.

WMT seems poised for a rebound

In summary, Walmart shares seem to have pulled back significantly to trade at an attractive forward P/E ratio. Therefore, with the stock approaching oversold conditions, it could be time to pounce on potential rebound profits.