Soft Guidance But Good Outlook: Why Walmart Is a Buy

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Walmart (NYSE:WMT) is a household name that really does not require any introductions. What you may not be aware of is the recent weakness in the stock. Year to date, the stock is down 5 percent, and in the last month it has been on a steady decline.

Walmart stock tends not to move with volatility, as evidenced by the tight 52-week trading range of $71.51 to $81.37. The stock is now slightly below the midpoint of this range, trading at $75.31. The question is this: Is the recent weakness an opportunity to get long the stock? To help answer this question, a review of the company’s recent performance is warranted to determine if the company is structurally weakening or if the stock is down for other reasons.

Walmart is one of a number of retailers that was impacted by the long winter in its first quarter. But it is one of the companies that is probably correct in assigning blame to the weather compared to other companies employing this excuse. In its first quarter, Walmart saw diluted earnings per share from continuing operations of $1.10, a decrease of 3.5 percent compared to last year’s $1.14.