Though Wal-Mart Stores, Inc. WMT has been working to boost its e-Commerce business, it wants to provide job assurance to its workers. Per media sources, the retail giant is testing a new program where store workers will deliver packages ordered online. The initiative will use blockchain technology that will ensure safety in its food supply chain. The program will be available in two New Jersey stores and in one Northwest Arkansas store.
We note that the company has been focused in training workers, who have helped to drive gains with improved customer service. The company has already invested $2.7 billion in employee training and wages in fiscal 2017.
Wal-Mart shares touched a 52-week high of $79.93 on Jun 2 and eventually closed at $79.62, following the news. In fact, the company’s shares have been outperforming the Zacks categorized Retail-Supermarkets industry since the past one year. The stock rallied 12.1% in the past one year, outperforming the Zacks categorized industry’s gain of 7.5%. We believe there is ample potential, which is quite evident from its Value Score of ‘A’, Growth Score of ‘A’ and Momentum Score of ‘B’, and VGM Score of ‘A’.
What further makes us optimistic about its performance in the near term is its low beta of 0.30 and long-term earnings growth rate of 6.1%. Further, Wal-Mart posted positive earnings streak for the seventh consecutive quarter, including the recently reported first-quarter fiscal 2018 results.
We note that Wal-Mart has been taking several initiatives to understand the evolving needs of customers to regain their confidence and boost sales. The company has delivered positive comps in the U.S. in the last 11 quarters. Moreover, traffic improved for the 10th consecutive quarter, owing to the company’s efforts to modernize stores for higher footfall and improvement in consumer spending.
Wal-Mart is also making huge investments in e-Commerce initiatives to compete with the biggest online retailer, Amazon.com AMZN. In this regard, the company continues to make huge investments in e-Commerce initiatives, including acquisitions. The company has undertaken three e-Commerce acquisitions, since the buyout of Jet.com, U.S. e-Commerce company, in Sep 2016. The Jet.com acquisition was a major step toward accelerating its online business. It offered customers a massive online marketplace where they can purchase items at discounted prices.
Despite the company’s efforts to boost sales and regain investors’ confidence, it still faces many headwinds, which are likely to impact earnings in the near term. Higher e-Commerce investments, declining international sales and currency headwinds are expected to impact results negatively.
Wal-Mart Stores, Inc. Price, Consensus and EPS Surprise
Wal-Mart Stores, Inc. Price, Consensus and EPS Surprise | Wal-Mart Stores, Inc. Quote
Zacks Rank and Key Picks
Wal-Mart currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the retail sector are The Children’s Place, Inc. PLCE and Deckers Outdoor Corporation DECK. While Children’s Place sports a Zacks Rank #1 (Strong Buy), Deckers Outdoor carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Children’s Place has expected long-term earnings growth of 8.0%, whereas Deckers Outdoor has expected long-term earnings growth of 9.8% for the next three to five years.
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