Here’s a preview of what I’ll be discussing on Talking Numbers today between 3:20 and 3:30 pm EST on CNBC:
WMT is down 3% today after weaker than expected guidance and a miss on earnings, despite the headline beat. In reality, the stock was up almost 25% year-to-date heading into the number, so the market was expecting perfection here. Having said that, I do think the technical and fundamental setup on WMT is more positive than the large majority of stocks in the broader market.
The first chart is a long-term, 20 year chart of WMT. I’ve used it here to demonstrate the importance of the recent breakout above $70.
WMT essentially traded between 45 and 65 for 10 years, and made a new all-time high last month on a clean breakout. The long-term chart illustrates that anyone who bought in the last 10 years is now a winner, and buyers were aggressive enough to take out all of that supply from the various investors taking profits at the high end of the range.
The second chart shows WMT’s trailing P/E ratio over the last 5 years:
Though the stock is up almost 20% on the year, it is in the middle of its valuation range, indicating that the stock has not necessarily gotten ahead of itself on this breakout. I have a hard time seeing WMT break down below the $70 breakout level barring a significant selloff in the broader market.