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Walmart Trims 2019 Guidance, Moody's Analyst Calls Stock Undervalued

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Walmart Trims 2019 Guidance, Moody's Analyst Calls Stock Undervalued

Retail giant Walmart Inc (NYSE: WMT) announced Tuesday morning a revision to its full year 2019 guidance.

What Happened

Walmart on Tuesday is hosting its annual meeting for the investment community. Management detailed in a press release a revision of its full fiscal year 2019 EPS from a range of $4.90-$5.05 to a new range of $4.65-$4.80. The company said the revision to 2019 EPS is due to a 25-cent per share dilution from the Flipkart acquisition.

Why It's Important

Walmart President and CEO Doug McMillon said the company continues to operate with "discipline" by balancing any near-term opportunities with the long-term outlook. The company is excited about its performance to date although it's not yet "satisfied" as much more work needs to be done.

"As we execute today and build for tomorrow, our associates and unique omni-channel assets position us for success," McMillon said.

Walmart kept its fiscal 2020 sales growth outlook unchanged at 3 percent or more while comps growth (excluding fuel) also remains unchanged at 2.5 to 3 percent for Walmart US and around 1 percent at Sam's Club (excluding fuel).

Analyst: Walmart Is Undervalued

Heading into Walmart's investor presentation, the company is likely to continue the path it has taken over the past few years, Charlie O'Shea, a fixed income analyst with Moody's told CNBC. Specifically, "tactical" investments will continue although the pace of capex growth will flatten and help support earnings. However, there's still capacity within Walmart's current debt rating to conduct another acquisition or even speed up its cash return to shareholders.

Taking a look at Walmart's profit, sales growth, margins and other metrics, the stock's valuation compared to other peers is undervalued, he said. Most notably, the company collects around $500 billion worth of sales but its market cap is only roughly half of sales.

"For a retailer of that quality seems a little low to me," the analyst said.

Shares closed Monday at $93.82 and were mostly unchanged at time of publication.

Related Links:

Walmart Posts Standout Quarter, But Raymond James Downgrades On Flipkart Costs

Cramer Sees 'Sweet Vindication' For Walmart Investors, Lazarus-Like Nordstrom Comeback

Photo credit: MikeMozartJeepersMedia - Own work, via Wikimedia Commons

Latest Ratings for WMT

DateFirmActionFromTo
Feb 2021Morgan StanleyMaintainsOverweight
Feb 2021Morgan StanleyMaintainsOverweight
Feb 2021Raymond JamesMaintainsOutperform

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