Walmart, one of the largest retailers in the world, will be showing profits on Tuesday. The mega-chain has been able to handle the pandemic with roadside pickup and its investment in the online shopping experience.
However, stocks have not done well this year. The stock is down more than 3%, trailing the S&P 500’s 11% gain, and clinching it as one of the worst Dow performers in 2021.
Ari Wald, head of technical analysis at Oppenheimer, sees Costco as the better big box bet over Walmart.
“We don’t have a really strong idea of how Walmart will react to a fundamental catalyst in terms of earnings, but we believe we believe it is underperforming compared to the relative strength that industry insider Costco has “Wald told CNBC’s” Trading Nation “Monday.
Comparing Walmart to Costco on the charts, Wald says Walmart has bounced back from March lows but is now showing signs of stalling at its 200-day moving average.
“Costco, on the other hand, hasn’t seen a definite breakout. It’s still below its December high, but the fact that it has traced more of its previous decline to that first quarter low is a sign of relative strength that indicates it is more There is support and less resistance. And I think when you add it up it speaks for an additional outperformance of Costco over Walmart, “said Wald.
However, Mark Tepper, President at Strategic Wealth Partners, is betting on Walmart for the long term. He says e-commerce was critical to Walmart’s success through the pandemic, but sees the return to store shopping as even better for the stock.
“It’s really the vaccination rate and return to normal that works best for Walmart because Walmart gets a little bit of everything – you get the e-commerce exposure, groceries, consumer electronics – a nice, diversified source of income, and they’re getting it is a one-stop shop, “said Tepper in the same interview.
Walmart also has an ace up its sleeve with its healthcare investments, says Tepper.
“The health care thing for them is going to be a long process, it won’t happen overnight. But when you think of all those high-margin medical services – diagnostic tests, x-rays, things that can be done a nurse rather than a doctor – this will help them get even more of their customers’ wallets in a very high margin way, “he said.
Walmart will report on Tuesday before the bell. Analysts surveyed by FactSet expect a profit share of USD 1.21 for the quarter ending in April after USD 1.18 in the previous year. Sales are expected to decline by around 2%.
Disclosure: Strategic Wealth Partners has an interest in Walmart.
Disclaimer of Liability