On Feb. 19, Walmart (NASDAQ: WMT), the world’s largest retailer, reports its fiscal fourth-quarter and full-year earnings, and investors may be wondering if the stock is a buy before the report.
It’s true that a stock may pop after earnings are released, particularly if numbers beat expectations. On the other hand, a stock can lose value if the report or outlook disappoints investors.
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Of course, investors should look beyond the next earnings report when assessing a stock, but buying just before a catalyst can be a good strategy. However, in the case of Walmart stock, which has been on a tear, it may not be the right move. Let’s examine why investors may want to hold off on buying shares of Walmart.
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Walmart stock has been on a tear as of late, rising roughly 20% year-to-date to a split-adjusted all-time high. Over the past 12 months it has gained nearly 29%.
In recent days, the stock has been nudged higher by upgrades from several analysts who raised price targets. Analysts at Oppenheimer noted expectations for a strong fourth-quarter holiday sales period, expecting sales to come in at the high end of Walmart’s projected growth range of 3.75% to 4.75%.
Walmart’s success over the past couple of years has been based on its pivot to reach a broader clientele. It has traditionally been a discount retailer catering to budget-conscious consumers, which has allowed it to perform well in downturns as people look for better deals.
While maintaining its traditional client base, it has successfully attracted higher-income shoppers with the convenience of online and store pick-up offerings, modernized stores, and a broader selection of brands, among other changes. That has allowed it to eat into the profit and market share of big-box rival Target, which has seen year-over-year earnings declines…
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