The largest retailer in the US is due to announce its latest quarterly results before US markets open on Thursday, 18 February.
In the lead up to the earnings announcement, Walmart’s share prices have breached the resistance that had been offered by its 50-day simple moving average (SMA). Walmart’s share prices must climb back above its January high of $149.77 in order to send a strong message to markets that it can arrest its downward trend from the past couple of months.
With its 50-SMA is now threatening to cross below its 100-day counterpart, this stock is in need of a positive catalyst to prevent a significant widening of the 4.67% gap from its highest-ever closing price of $152.79 which was registered on 30 November.
Walmart’s e-commerce sales are expected to have surged by 66%, as the retail behemoth focuses on its omnichannel push. With the pandemic having driven consumers to purchasing their groceries online, coupled with shoppers being more budget-conscious amid the economic uncertainty, that should serve as a major boost to its digital revenue streams.
That should help propel Walmart’s net income for its entire 2021 fiscal year to a record high of $17.9 billion for the 12 months ending 31 January.
Market participants are already pricing in a single-day absolute move of 4.06% for Thursday. Over the past decade, the stock has averaged a 3.08% absolute move (either upwards or downwards) on earnings day.
However, note that Walmart’s stock has fallen after 4 out of the past 5 earnings announcements, suggesting that shareholders tend to indulge in some profit-taking on the day.
Although the conclusion to either the TikTok acquisition or DOJ lawsuit appears far off at this juncture, it could still cast a cloud over Walmart’s share prices in the interim.
Walmart bulls are likely to focus on the company’s fundamentals, especially its push into the digital and fintech realms, in order to keep the stock’s uptrend intact.
Written on 17/02/2021 07:30 GMT by Han Tan, Market Analyst at FXTM
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