Head for the hills part II: Something wicked this way comes

Walmart (WMT)

Walmart reports earnings on Thursday. The consensus estimate is $1.13, and there’s a pretty good chance, IMHO, that they are going to miss. Even if they hit the number, traders are likely to dump WMT shares if the company lowers its guidance for the rest of the year. Of course, WMT shares could rise if they had a blowout quarter (their fiscal first quarter of 2019), but why would that be the case when the company’s profit margin is shrinking? Once again, there will certainly be an increase in EPS over the course of the year thanks to tax cuts and share buybacks, but why would anyone base a buy decision on that when both are one-time only EPS gains that don’t translate to any sustained growth. It’s hard to get excited about a 10% rise in EPS that everyone knows is coming when everyone also knows it represents nothing but juked numbers.

Chart courtesy of www.stockcharts.com

Symbols: BBBY DAL MO SIX WMT
Julian Close

Julian Close

Julian Close became a stockbroker in 1995. In his 20 years of market experience, he has seen all market conditions and written about every aspect of investing. Julian has also written extensively on corporate best practices and even written reports for the United Nations. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC.

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