The Good News Is, Walmart Stock Is Now Available At A Walmart Price

  • Walmart stock is now badly undervalued compared with its retailing peers.
  • It is doing many things in electronic commerce which its rivals are not capable of trying.
  • Neighborhood Markets and a competitor to Apple Pay is among those attempts.

You can now get Walmart (NYSE:WMT) at a Walmart price, and its a bargain, like I've said before.

Consider this. The market cap of $191 billion is less than 40% of the current year’s estimated sales of $500 billion. Compare the current Price/Earnings multiple, at 12.7, with nearly 17 at its main competitor, Target (NYSE:TGT) or 20 at another primary competitor, Kroger (NYSE:KR).

At Walmart’s current price you’re paying just over 10 times operating cash flow for the whole company.

There were reasons for Walmart to fall, almost 30% in the last year. Top-line growth has stalled, rivals are growing, and the company told investors recently it will forego profits for a few years to improve operations, especially in e-commerce.
WMT stock chart

Walmart stock price chart by

But this company is not yet dead. The Neighborhood Market concept seems to be working, meaning Walmart is no longer “just” a big box, and that it can grow effectively in major urban markets, not just on the periphery. As bad as it’s assumed its Web site is, compared with that of Amazon (NASDAQ:AMZN), Walmart is currently the second-largest e-tailer around, and by a wide margin. As much as the investing class may sneer at Walmart shoppers, they number in the tens of millions, and the company has a virtual monopoly on small markets from coast to coast.

Walmart does not have to become Amazon to make you money. If it just becomes as valued as Target, it should gain 30%. If it becomes as valued as Kroger, it can rise 50%.

A lot of people sneer at Walmart’s e-commerce efforts, but it is trying more things than Target or Kroger are. Walmart Pay, the QC code-based payment system being rolled out this week, is not an “atom bomb” dropped on Apple Pay, but it could become an effective way for Walmart to increase loyalty through customer data. It is based on CurrentC, a technology Walmart had been working on with others for years.

Walmart now has one of the largest OpenStack clouds in the world and its Walmart Labs has dozens of projects on GitHub, including a program called OneOps designed to fight Amazon Web Services lock-in. Does Target? No. Does Kroger? No.

Walmart is still in a turnaround mode, not ready to take over the world, or eat Amazon’s lunch. But it is now undervalued against the retailers it most closely competes with, and a year from now I suspect a lot of people may be saying it doesn’t deserve to be. At $60/share it’s a bargain.

Show Full Article
5 2
Is this article helpful ?    

Author's Disclosures & Disclaimers:
  • I am not an investment advisor, and my opinion should not be treated as investment advice.
  • I am not being compensated for this post (except possibly by Amigobulls).
  • I do not have any business relationship with the companies mentioned in this post.
Amigobulls Disclosures & Disclaimers:

This post has been submitted by an independent external contributor. This author may or may not hold any positions in the stocks discussed. Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. Amigobulls has not verified the author’s positions in the stocks discussed, and does not provide any guarantees in this regard. The author may be paid by Amigobulls for this contribution, under the paid contributors program. However, Amigobulls does not guarantee the authenticity or accuracy of the information provided by the author in this post.

The author may not be a qualified investment advisor. The opinions stated in the post should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions.

Amigobulls does not have any business relationship with any of the companies covered in this post. This post represents the views of the author/contributor and may not reflect the views of Amigobulls.

show more

Comments on this article and WMT stock

Do share this awesome post