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Brian Sozzi Sees 'Red Flag' In Wal-Mart's Underlying Business

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Brian Sozzi Sees 'Red Flag' In Wal-Mart's Underlying Business

Belus Capital Advisors CEO and Chief Equities Strategist Brian Sozzi commented on Wal-Mart's (NYSE: WMT) disappointing first quarter.

With shares up approximately four percent leading up to the press release, Sozzi remarked “Not only does that buying interest in Walmart shares look foolish in light of the 1Q14 figures, but it stands to be completely reversed in coming months based on the numerous fundamental disappointments in the quarter from a company that has grown too big to manage properly.”

Related: Wal-Mart Slides On Disappointing Top & Bottom Line, Guidance Results

The Chief Equities Strategist in his note reminded investors and the general public that this is the fifth consecutive “earnings warning” as Wal-Mart continues to face “deep” issues. He added that the past two years of underperformance have been under the leadership of U.S. President Bill Simon.

From missing “easy” comp guidance to overusing the “severe weather” excuse, Sozzi is unimpressed by the underlying business. He noted that store comps for Wal-Mart and Sam's Club were worse excluding online sales and flat second quarter guidance is “no good” with Q2 EPS $0.13 below consensus.

Negative traffic despite the company's investments is “very reflective in how people are now shopping and the company not being able to full play in that trend,” according to Brian Sozzi. He concluded, “Right into the weak 1Q14 earnings and 2Q14 guidance letdown (and continued pressure on ROI…are those tech investments online paying off?) this management teams is full bore on repurchasing stock. Red flag.”

Shares of Wal-Mart closed at $78.74 on Wednesday. In pre-market trading, the stock fell as low as $76.05, down more than 3.5 percent. Shares have slightly bounced back, trading around $76.63 at last check.

Posted-In: Belus Capital Advisors Brian Sozzi First Quarter Results and GuidanceAnalyst Color Earnings News Guidance Best of Benzinga

 

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