The stock of Walmart Stores (NYSE: WMT) were plunging during mid-morning trading on Thursday after the retail giant reaffirmed its fiscal earnings estimate for the following year and stated that it anticipates fiscal earnings for 2018 to be relatively flat year-over-year.
According to Jim Cramer, “I don’t know where these estimates came from that people felt Walmart was going to have a big up year.”
“I know the last couple quarters have been good, but how many times does (CEO Doug) McMillon have to say we have to spend in order to keep up?” he further added.
“And by the way ‘keep up’ is code for unless Amazon (AMZN) kills us.”
Mr. Cramer pointed out that everyone is “fearful” of Amazon.com Inc.
“People are cowering over Amazon,” Cramer said.
For fiscal year 2017, the Arkansas-based retail company continues to forecast adjusted earnings per share of between $4.15- $4.35. Market analysts are anticipating $4.30 earnings per share for the full year.
Aside from this, the corporation stated that it is considering to slow down the opening of new stores and boost investments in its online initiatives. The retail company also indicated that it also plans to make sure that most of the population in the United States can be delivered to in a day.
Cramer said, “I think Walmart is right to do this.”
“Most (companies) are trying to equalize what Amazon can do,” he further stated.
Today, Walmart is conducting its annual investor day.
We rated the WMT stock a Buy as the strong points of the company in several areas have a greater effect compared to any other weaknesses. Our stock rating is not based on this report or any other news in any particular day.
Some of the strengths of Walmart include its higher net income, good revenue growth, robust rally in stock price during the past 12 months, generally strong financial position, reasonable levels of debt, as well as attractive cash flow from operations.
Meanwhile, its major weakness is its fairly low profit margins.
As of 10:37 AM GMT -4 on October 6, the stock of Walmart is changing hands at $69.70, down by 2.75 percent or 1.97 points.