Walmart WMT shares hit new highs on April 21 and the stock is up 3% in 2022 despite a recent pullback and looks great compared to the S&P 500’s 17% fall and its industry’s 10% decline.

Walmart’s size is helping it navigate the turbulent global supply chain and its low-price focus is set to become even more attractive as consumers attempt to save more money amid 40-year high inflation. And WMT stock trades 14% below its current Zacks consensus price target ahead of its Q1 financial results that are due out on Tuesday, May 17.

Never Going Out of Style

Walmart is a retail titan that pulled in $573 billion dollars in sales last year (its FY22) after they jumped 7% during the height of the pandemic. Like everyone in retail, Walmart is now offering every form of delivery and pick-up options possible to make its shopping experience as convenient as ever. The company’s U.S. comps jumped 6.4% last year (up 15% on a two-year stack), while its e-commerce segment climbed by 11% (90% on a two-year stack).

Part of its push to compete against Amazon AMZN includes its own subscription service dubbed Walmart+. And Walmart is focused on landing partnerships with popular digital native retailers, while bringing more businesses to its own third-party marketplace. The company also saw its growing advertising segment reach over $2 billion in annual revenue last year as active advertisers using Walmart Connect surged 136%.

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WMT has invested in its own financial efforts and partnered with fintech firms to improve its own in-house financial services offerings. In April, Walmart announced that it hired digital payment power PayPal’s CFO to take over as WMT’s financial chief. The company is also slowly building out its telehealth services around the country to complement its in-person Walmart Health centers.

Walmart’s overall goal is to add to its revenue streams and continue to bolster its consumer-focused offerings to maintain its standing as one of the go-to one-stop shops. It’s also worth remembering that Walmart owns Sam’s Club and other entities.

What’s Next?

Walmart is doing its best to work through the ongoing supply chain bottlenecks that are helping raise prices throughout the economy. The company is also committed to hiring even more people at the moment as it maintains its push into new areas, while also boosting employee pay.

Walmart’s size and buying power helps it land better deals with suppliers and it’s also able to absorb some of the higher costs to keep prices low. And inflation is driving more shoppers to Walmart, with sales projected to climb another 3% in FY23 (this year) and 3.5% next year, on top of strong, covid-boosted years. Meanwhile, Zacks estimates call for its adjusted earnings to jump 5% and 8%, respectively.

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Bottom Line

Walmart lands a Zacks Rank #3 (Hold) right now and it has consistently topped quarterly EPS estimates. On the valuation front, WMT trades 22% below its two year-highs at 21.3X forward 12-month earnings. This also represents a discount compared to its five-year median.

Walmart stock has climbed 115% in the last five years to beat the S&P 500’s 90% and its 1.5% dividend yield matches the benchmark. Plus, 75% of the brokerage recommendations Zacks has are “Strong Buys” or “Buys,” with zero “Sells.”

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