Walmart (WMT) Good Momentum Should See Price Upside Post Earnings

Analysts believed that Walmart generated good momentum in the fourth quarter despite the topsy-turvy spending backdrop throughout the period. What investors would be looking out would be the Q4 earnings details and Walmart 2024 outlook, this should provide more optimism on the sustainability of its recent share gains and its future potential.

Industry analysts anticipate the company to report EPS of $1.64 (-4.1% YoY) on revenue of $170.7 billion (+4.0% YoY). We have seen WMT stock accumulated a total return (price change + dividends) of 7.4% for the year-to-date, outperforming the broader S&P 500 by almost a couple of percentage points.

Walmart's stock is now hovering around $170 per share, but that figure will change when the company undergoes a 3-for-1 stock split after Thursday's close.

Technical has shown an uptrend, which I believe the good momentum by Walmart has rub off the market, and we could take advantage of the stock split to accumulate.

WMT last reported earnings on 16 Nov 2023 before the market opened (BMO). The company held a conference call for investors at 8:00 AM eastern on the same day. WMT shares declined -8.1% the day following the earnings announcement to close at 155.46. Following its earnings release, 95 days ago, WMT stock has drifted +9.6% higher.

From the time it announced earnings, WMT traded in a range between 149.54 and 171.93. The last price (170.36) is closer to the higher end of range.

Estimated implied straddle for upcoming earnings is 4.2%. This quarter we should be able to see a positive price effect because market has been looking forward to the good momentum of the stock price.

On top of this, I believe we should be able to see a more positive outlook for 2024.

The options market overestimated WMT stocks earnings move 58% of the time in the last 12 quarters. The predicted move after earnings announcement was ±4.0% on average vs an average of the actual earnings moves of 4.2% (in absolute terms). This shows you that WMT tended to be more volatile than the options market predicted for the earnings stock price reaction.

This suggest that option valuation is undervalued, we could be seeing an upside trading for at least 0.2% based how we see implied move for WMT.

I would be expecting Walmart to move upside after its earnings.

I would think Walmart is in a good position to continue its innovation and provide a positive outlook for this retailer. U.S. economy inflation is under control, consumers should be spending, and this should be good news for Walmart.

Appreciate if you could share your thoughts in the comment section whether you think Walmart stock price would move upside after its earnings.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.