The Black Friday event has turned into a prominent shopping event over the years, garnering substantial global sales. The United States accounts for this event’s largest revenue share of the global market. The global Black Friday sale market net worth is estimated to be around $273.10 billion in 2022.

Retail juggernaut Walmart Inc. (WMT - Get Rating) is looking to boost its sales this Black Friday. The company is expected to spread the Black Friday savings over events throughout November and cap off a month of deals with Cyber Monday. The company is also bringing back its Early Access benefit for Walmart+ members.

The company’s third-quarter EPS surpassed the consensus estimate of $1.32 by 14%, while its topline beat the $146.80 billion estimate by 3.2%.

The stock has gained 4.8% year-to-date and 10.9% over the past month to close its last trading session at $151.69. It is trading higher than its 50-day moving average of $137.33 and 200-day moving average of $136.63, indicating an uptrend.

Here are the factors that could influence WMT’s performance in the near term:

Solid Financials

For the fiscal third quarter ended October 31, WMT’s total revenues increased 8.7% year-over-year to $152.81 billion. This can be attributed to a rise of 8.8% from the prior-year quarter in net sales to $151.47 billion. Its adjusted operating income (constant currency) improved 4.6% from the prior-year period to $6.06 billion. Its adjusted EPS rose 3.4% year-over-year to $1.50.

Favorable Analyst Sentiment

The consensus revenue estimates of $159.20 billion and $146.13 billion for the consecutive quarters ending January and April 2023 indicate 4.1% and 3.2% year-over-year increases, respectively. Street revenue estimate for fiscal 2023 of $606.03 billion reflects a 5.8% year-over-year rise. Its EPS is expected to grow 4.3% per annum over the next five years.

Of the 24 Wall Street analysts rating WMT in the last three months, 20 have rated the stock Buy, while four have rated it Hold. The 12-month median price target of $162.83 indicates a 7.3% potential upside. The price targets range from a low of $140 to a high of $175.

Reliable Dividend

In February, WMT approved an annual cash dividend for fiscal 2023 of $2.24 per share, indicating an increase of approximately 2% from the $2.20 per share paid for the last fiscal year. The next $0.56 per share quarterly dividend installment is payable on January 3, 2023.

Its annual dividend yields 1.48% on the current share price. The company has a payout ratio of 36.56%. Its dividend payouts have increased at a 1.9% CAGR over the past three and five years. The company has a record of 48 years of consecutive dividend growth.

POWR Ratings Reflect Promising Prospects

WMT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. WMT has a Sentiment grade of A, in sync with favorable analyst estimates. The stock also has a B grade for Stability, consistent with its five-year beta of 0.53.

In the 39-stock Grocery/Big Box Retailers industry, it is ranked #10. The industry is rated A.

Click here to see the additional POWR Ratings for WMT (Growth, Value, Momentum, and Quality).

View all the top stocks in the Grocery/Big Box Retailers industry here.

Bottom Line

WMT is seeking to gain from the Black Friday weekend. Moreover, the company has demonstrated its resilience through increased dividend payments over the years. As the company enjoys a leadership position in the retail industry, it might be a solid buy ahead of Black Friday.

How Does Walmart Inc. (WMT) Stack up Against Its Peers?

While WMT has an overall POWR Rating of A, one might consider looking at its industry peers, Ingles Markets, Incorporated (IMKTA - Get Rating) and Village Super Market, Inc. (VLGEA - Get Rating), which also have an overall A (Strong Buy) rating.

WMT shares rose $0.40 (+0.26%) in premarket trading Wednesday. Year-to-date, WMT has gained 6.51%, versus a -14.81% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...

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