Walmart at $122 is a buy as the company improves cost controls

By: Motiur Rahman
Motiur Rahman
Md Motiur is a Financial Analyst at Invezz covering the North American, European and Asian stock markets. He has… read more.
on Jun 8, 2022
  • Walmart has support at $119.
  • The company has been focused on controlling costs.
  • We think the stock will have positive earnings surprise hence it is a buy.

Walmart Inc. (NYSE:WMT) is trading at $122. Zacks Research has rated the stock a strong sell. We think the opposite is true. Walmart is a buy at $122, with a price target being $135 before the next earnings date.

Walmart is still suffering from the news of declining returns in the retail segment. Since the stock dropped from $149 to $119 about four weeks ago, it is yet to recover. This analysis considers that traders overreacted to news of declining earnings in the retail industry.

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Walmart’s ROE was 16.75% in the last fiscal year. The ROA was recorded at 5.38%. The EPS of the company is $4.89, placing the PE at 26.83. The growth rate is currently projected at only 5.50%, which barely covers the inflation rate. Inflation is the company’s Achilles heel.

The financial metrics above point to potential weaknesses at Walmart. Our analysis shows the metrics reflect the nature and state of the retail industry. We also think that Walmart could surprise the market in the upcoming earnings. The company has been putting in place measures to improve cost management.

Walmart has support at $119 with a price target of $135

Source – TradingView

Our analysis shows that Walmart has support at $119. From here, the target price is $135. This analysis shows that Walmart will gain towards the target price by the next earnings date. After that, the stock will move to find the resistance level of $150. The RSI at 35.44 tends towards the oversold region. Technical analysis shows the stock is a buy.

Summary

Our analysis considers Walmart a buy at $122. Investors may consider accumulating at this level. The stock will gain towards $135 by the next earnings date. Thereafter, the stock will rally to find the $150 valuation.

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