Should You Buy Walmart Stock Before Nov. 19? History Has a Clear Answer.
Key Points
Walmart stock fell after the last report as management warned of a potential slowdown.
Walmart stock is expensive, trading at a P/E ratio of about 45.
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Walmart (NASDAQ: WMT) isn't a growth stock, but it's had some pretty strong performance over the past few years. It's hit a bit of a bump, recently, though. Investors weren't happy with its latest updates, which included mediocre U.S. comparable sales (comps) growth and caution that high inflation could disrupt shopping.
It reports 2027 fiscal third-quarter (ended Oct. 31) earnings on Nov. 19. Should you buy the stock beforehand?
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Image source: Walmart.
Walmart is the country's largest discount retail chain, with more than 5,700 stores across its portfolio. Worldwide, it has almost 11,000 stores.
In general, it's a powerhouse in challenging economic conditions because people are looking for the lowest prices on essentials. Walmart has a store within a 10-mile radius of 90% of the U.S. population and a robust, growing e-commerce platform, positioning it to win under any circumstances.
U.S. comps increased an underwhelming 2.6% in the second quarter (ended July 31), but total sales were up an impressive 5.9%, and operating income grew 29%.
The market is more worried about what's going to happen next. Management indicated that things might be slowing as customers just can't keep up with inflation.
Whatever happens on Nov. 19 is going to hinge on its latest update. If that trend continues, the stock is likely to fall further, especially because Walmart stock is quite expensive, trading at a P/E ratio of about 45. However, there's an interesting trend you can see in how the stock reacted after the last four quarters, and it's not about how well the stock did.
WMT data by YCharts
What you see here is that sometimes it went up, and sometimes it went down. It's rising right now in anticipation of a good report, which is a positive sign.
The interesting trend, though, is that even after a good report, it continued rising for a while, whereas after a bad report, it came back up. What that tells me is that there's no rush to buy the stock before the report, although long-term investors can feel comfortable buying at any time.
Should you buy stock in Walmart right now?
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Jennifer Saibil has positions in Walmart. The Motley Fool has positions in and recommends Walmart. The Motley Fool has a disclosure policy.
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