Your trusted source for the latest news and insights on Markets, Economy, Companies, Money, and Personal Finance.
Walmart Gains Dominance In Retail Market As Target Struggles.jpg

Walmart Gains Dominance in Retail Market as Target Struggles

Key Points
Walmart’s Q2 results and guidance confirm trends suggested by other big-box retailers.
Consumers are shifting away from big-ticket items in favor of everyday needs.
Walmart is winning the retail wars and could see its shares hit new all-time high levels soon.
5 stocks we like better than Walmart
Walmart’s NYSE: WMT Q2 results confirm trends Target NYSE: TGT, Home Depot NYSE: HD, and TJX Companies NYSE: TJX suggested. Consumers are shifting away from big-ticket items and large projects in favor of smaller, non-discretionary items. The shift is from discretionary categories into value, consumables, everyday items, health, and beauty.
The difference between Walmart’s results and the others is that it posted solid growth on the top and bottom lines, beat the consensus figures, raised guidance, and indicated strength in the back half. The biggest takeaway from the report is that Walmart is gaining a share over Target, which is bad news for Target shareholders.
Shares of Target were already trending lower and may now break through critical support. Target’s post-release action was to the upside and had the stock up high-single-digits at the high of the session.
The bad news for chart watchers is that the action fell sharply from the opening levels and confirms significant resistance below the 150-day moving average and at levels coincident with the 30-day EMA and critical support levels.
The Walmart report gives no reason for investors to choose Target and every reason to shift their retail assets to Walmart.
Walmart Gains Share in the US
Walmart had a great quarter, given the weaknesses posted by its largest competitors. The company produced $161.63 billion in net revenue for a gain of 5.7% compared to last year. The revenue beat the consensus by 150 basis points, and the strength was carried through to the bottom line.The strength was led by a 6.4% increase in US comps driven by strength in grocery and health & wellness. Grocery sales grew by a high-single-digit figure on the increase in market share (simply put, Walmart has more of what people want in 1 location, at better prices) while health & wellness grew by double-digits.
That’s good news for names like Ulta Beauty NASDAQ: ULTA which report later in the month.
eCommerce continues to underpin the company’s strength. eCommerce grew by 24% globally, accounting for 15% of the net revenue. US digital sales saw the strongest increases in pick-up and delivery, categories heavily influenced by grocery items. Sams Club was also strong. Sales at the membership club were flat YOY due to the decline in fuel prices, but ex-fuel comps are solid at 5.3%.
TJX Companies also raised its guidance as value-conscious shoppers trade down from full-price retailers. It also grew sales in apparel and home goods categories, suggesting it takes share from Target. When it reports, Kohl’s NYSE: KSS may also do well in these categories.
The Analysts Are Driving A Wedge Between Walmart And Target
Target trades at a value to Walmart and pays a higher, reliable dividend yield, but its share are moving lower, and the analysts aren’t helping. Target analysts rate the stock at Hold with a consensus about 30% above the price action, but that figure is trending lower.
On the other hand, Walmart’s 31 analysts view the stock as a Moderate Buy with a price target above the current action and trending higher compared to last month, last quarter, and last year. Those trends are unlikely to change because of the new guidance, and Walmart’s distribution is of royal quality.
The WMT chart is favorable to higher share prices. The market is in an uptrend and confirms support at the 30-day moving average. Assuming the market follows through on this signal, shares of WMT should retest the all-time high soon and possibly break out to a new high. If the analysts continue to raise their targets, a new high is all but assured.
Before you consider Walmart, you’ll want to hear this.usafinancetrends.comkeeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and Walmart wasn’t on the list.While Walmart currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.View The Five Stocks Here has just released its list of 20 stocks that Wall Street analysts hate. These companies may appear to have good fundamentals, but top analysts smell something seriously rotten. Are any of these companies lurking around your portfolio? Find out by clicking the link below.Get This Free Report

Share this article
Shareable URL
Prev Post

The Entire Police Force of This Minnesota Town Resigned Due to Low Wages

Next Post

7 ETFs to Help You Navigate a Bear Market

Leave a Reply

Your email address will not be published. Required fields are marked *

Read next
Key Points Ollie’s Bargain Outlet Holdings had a mixed quarter relative to the analysts’ estimates,…
Key Points United Airlines’ earnings beat signals improved financial performance and resilience. A…
Key Points Stocks shrugged off the jobs report and closed the week in the green.  Investors presume the Fed will…
Key Points Iron Condors is a multi-leg market-neutral options strategy best suited for range-bound stocks and…