Earnings Season: Wal-Mart Stores, Inc. (NYSE:WMT)
It is earnings season once again and in honor of this highly anticipated event we will be profiling one stock each day that investors will we watching once the quarterly earnings results are released. With the highs we’ve reached to date, market reaction to these earnings results will be imperative to determine whether the uptrend will continue or if a correction is set to occur. Please join us over the next few weeks while we give you the information you need before the companies report.
The Stock
Wal-Mart Stores, Inc. (NYSE:WMT) reported earnings this morning that beat expectations. The company reported 88 cents per share, trumping the 85 cent per share expectation. Compare this to the earnings in the year ago period of 77 cents per share and strong growth is revealed. The stock, as a result, is up almost 3% by midday.
The company has no doubt benefitted by the economic downturn where cheaper alternatives by way of this company’s discounted products are sought by consumers in uncertain times. A spokesperson from the company mentioned that this does not appear to be a blip that will only last through this negative economic period. Consumers that have experienced and benefitted from the cheaper prices are said to continue coming back, despite the improving economic prospects. The new customer base is expected to hold and endure through good times and bad.
The stock currently has an analyst “buy” rating, however it is being indicated that institutional investors have been divesting of shares of this company. This is not entirely a surprise, not because of the business that this company operates, but by the fact that it operates within the consumer discretionary space which has tendencies of weakening throughout the summer months. The prospects for this stock aren’t as bleak as what the sector is subject to.
Fundamentals are solid and place this stock at $58.50, however longer-term prospects place this stock at $63.50, if current targets hold true. The stock is reaching a point of resistance at $54.50, which will attempt to limit upside. Next point of resistance is around $56.
Over the past 4 years following Q1 earnings reports, all of which have either met or exceeded expectations, the stock has appreciated 1.4% in the 30 days following the event, only to relinquish the gains 60 and 90 days out for losses reaching 3.3%.
Chart Courtesy of StockCharts.com
The Clock
The stock seasonally shows flat trading from June through to September, after finding quick gains leading into this period reaching 4%. We are almost at that level now after today’s session alone. As with the other players in the Consumer Discretionary space, this stock finds strength in the October through to April period for gains reaching 15% on average.
| Wal-Mart Stores, Inc. (WMT) 52.73 | + 0.61 (1.17%) | ||||||||||||||||||||
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| Seasonality Analysis | |||||||||||||||||||||
| Analysis has revealed that with a buy date of September 1 and a sell date of April 5, investors have benefited from a total return of 110.46% over the last 10 years. This scenario has shown positive results in 7 of those periods. | |||||||||||||||||||||
| Conversely, the best return over the maximum number of positive periods reveals a buy date of October 10 and a sell date of April 5, producing a total return over the same 10-year range of 76.97% with positive results in 9 of those periods. | |||||||||||||||||||||
| The buy and hold return for the past 10 years was -13.12%. | |||||||||||||||||||||
| Technical Analysis | |||||||||||||||||||||
| Support 2 | Support 1 | Pivot Point | Resistance1 | Resistance2 | The Numbers | ||||||||||||||||
| 51.68 | 52.21 | 52.56 | 53.09 | 53.44 | Most Recent Close: | 52.73 | |||||||||||||||
| Support/Resistance Analys | Broke Lwr Resistance (1) | 52-Week High: | 56.27 | ||||||||||||||||||
| MACD Analysis: | Negative/Increasing | 52-Week Low: | 46.54 | ||||||||||||||||||
| MACD vs. Signal: | Below/Thinning | Fib. Retracement: | ~ 61.8% | ||||||||||||||||||
| RSI Analysis: | Below 50 | 50-Day MA: | 54.16 | ||||||||||||||||||
| Stochastic (Fast) Analysis: | Bullish Crossover | 200-Day MA: | 52.14 | ||||||||||||||||||
| 50 vs 200-Day MA Analysis: | 50-day Above 200-Day MA | High Critical Level: | 55.00 | ||||||||||||||||||
| Year over Year Trend: | Weakly Gaining | Low Critical Value: | 52.48 | ||||||||||||||||||
| Critical Level Analysis: | Within Critical Levels | Average Monthly Gain: | 0.7% | ||||||||||||||||||
| MFI Analysis | Below 50 Rebounding | Technical Rating: | 10 | ||||||||||||||||||
| Candlestick Analysis | Neutral/Indecision | On a scale of 1 to 10, the higher the rating, the more appealing the investment is to buy at current levels. | |||||||||||||||||||
| Situational Analysis | |||||||||||||||||||||
| Past Year | Advancing Sessions % | Return % | 10-Year Average | Advancing Sessions % | Return % | ||||||||||||||||
| May 17 thru Jun 16 | 47.6 | 0.2 | May 17 thru Jun 16 | 52.7 | 1.1 | ||||||||||||||||
| Best Return: 6% – Sell Jun 5 | Best Return: 5.1% – Sell Jun 2 | ||||||||||||||||||||
| May 17 thru Aug 15 | 54 | 8.2 | May 17 thru Aug 15 | 50.3 | -0.1 | ||||||||||||||||
| Best Return: 8.3% – Sell Aug 13 | Best Return: 7.3% – Sell Jul 8 | ||||||||||||||||||||
| May 17 thru Nov 13 | 52 | 11.1 | May 17 thru Nov 13 | 50.7 | 0 | ||||||||||||||||
| Best Return: 11.2% – Sell Nov 12 | Best Return: 8.8% – Sell Aug 8 | ||||||||||||||||||||
| Following Earnings Releases in General – Last 12 Periods | Following Q1 Earnings Releases – Last 4 Periods | ||||||||||||||||||||
| 12-Period Average | Advancing Sessions % | Return % | 4-Period Average | Advancing Sessions % | Return % | ||||||||||||||||
| After 30 Days | 51.7 | 3.4 | After 30 Days | 51.2 | 1.4 | ||||||||||||||||
| Best Return: 5.6% – After 21 Days on Average | Best Return: 4.5% – After 19 Days on Average | ||||||||||||||||||||
| After 60 Days | 50 | 1.6 | After 60 Days | 47.6 | -3.3 | ||||||||||||||||
| Best Return: 7.7% – After 30 Days on Average | Best Return: 4.5% – After 19 Days on Average | ||||||||||||||||||||
| After 90 Days | 50 | 1.2 | After 90 Days | 50 | -2.1 | ||||||||||||||||
| Best Return: 8.6% – After 51 Days on Average | Best Return: 5% – After 35 Days on Average | ||||||||||||||||||||
| Further Analysis | |||||||||||||||||||||
| Sector: | Services | Industry: | Discount, Variety Stores | ||||||||||||||||||
| According to Thackray’s 2010 Investors Guide, the period of seasonal strength for the Consumer Discretionary Sector ranges from October 28th through to April 22nd. Corresponding to the seasonality of the broad market, this sector finds strength from consumers buying/upgrading large ticket items (cars, homes, etc.) during late winter & early spring, and of course let’s not forget the holiday buying season. This sector peaks just before equity markets top out in May. | |||||||||||||||||||||
| Current Consensus Recommend: | Buy | ||||||||||||||||||||
| Recommendation 1-Month Ago: | Buy | ||||||||||||||||||||
| Recommendation 3-Months Ago: | Outperform | ||||||||||||||||||||
| Disclaimer | |||||||||||||||||||||
| Analysis, comments, calculations, and opinions offered in this report, available via EquityClock.com, are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered in this report is believed to be accurate, but is not guaranteed. | |||||||||||||||||||||
| © 2010 EquityClock.com, member of the Tech Talk Financial Network | |||||||||||||||||||||
Stocks mentioned in this post: WMT
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