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Insider Profile: Walmart (WMT)

by | Mar 11, 2021

Walmart (WMT) with a notable open market buy on 3/8 from director Randall Stephenson of 7,725 shares at $129.633, a more than $1M buy. This is the first open market buy in the name since December 2015 and largest by dollar value since Helen Walton bought $40M in stock in 2004. Stephenson is the former CEO of AT&T who joined the board last week. The $369B company trades 22.5X earnings, 0.66X sales, and 25.8X cash with a 1.66% yield and high-single digit growth. WMT is down over 8% for the year and more than 10% from recent highs but back at a notable spot around $130 as the 38.2% Fibonacci of longer-term rally. Shares are also back at a key volume node and breakout spot from June/July. The company said in February they expect investments in FY22 to be around $14B as they raise wages, enhance supply chain capacity and automation to stay ahead of demand, improve the customer experience and increase productivity. WMT has been expanding their online and subscription model with Walmart+ which gives them free delivery and more. They also made some big moves to advance a new fintech initiative that CFO Brett Biggs talked about yesterday at the UBS Consumer Conference:

“ I’m excited about it. It’s something where we — we’ve had a pretty big financial services business for a while. I’d call it more of an analog financial services business, but it’s important. It’s cards, it’s money transfers, it’s other things that customers want. But I think this gives us this joint venture and it gives us an opportunity to do some things that are maybe a little different, maybe a little more sophisticated, more digital, for sure, and having the skill sets that we’ll bring into that, along with the resources that we have and the customer base that we have already. It’s not like we have to go out and have really expensive customer acquisition costs. We’ve got the customers today that are already familiar with our brands. So when you put all that together, I think there’s a number of things that — where we could really make an impact on that industry.”

Analysts have an average target for shares of $150 with a Street High $180. Evercore positive on 2/23 noting that pushing back some of their EPS goals was a disappointment but they successfully navigated a global pandemic in 2020 and grew comps faster than the market. The company is also accelerating change by embracing innovation and speed and a customer centric business model. Goldman a buyer into the dip noting that the firm sees the greater capex investment as Walmart displaying the benefits of its higher cash position after a solid 2020. Walmart is setting up more opportunity for taking share and doing it more profitably. Hedge fund ownership was flat in Q4.

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