Walmart Shows Signs of Stability Amid Reduced Volatility and Upcoming Earnings Concerns

Technical Analysis

Currently, Walmart Inc. (NYSE: WMT) is trading at $85.15, having dropped 0.56% from its last close. The price fluctuations between $84.73 and $85.83 reflect a modest range compared to its Average True Range (ATR) of 2.43, suggesting reduced volatility. With a Relative Strength Index (RSI14) of 41, Walmart is veering toward an oversold condition, indicating potential for a price correction upward. The Moving Average Convergence Divergence (MACD) of -5.50 highlights bearish momentum persisting over the short term.

Walmart's 50-day moving average stands significantly higher at $94.39 compared to the current price, suggesting a strong downward trend. However, the price stays above the 200-day moving average of $83.36, which often signals longer-term price stability. Support is identified at $84.76, with resistance pegged at $87.82.

Fundamental Analysis

Fundamentally, Walmart is a robust player with a market capitalization of approximately $682.63 billion, reflecting its strong position in the retail sector. The recent pullback in price from its year high of $105.30 suggests that current market conditions, including consumer confidence impacted by inflationary pressures and international trade anxieties, have weighed on the stock.

Walmart's price-to-earnings (P/E) ratio of 35.33 indicates relatively high market expectations compared to industry norms. The trailing twelve months (TTM) earnings per share (EPS) of 2.41 suggest steady earnings, compatible with the last earnings estimates. The upcoming earnings announcement scheduled for May 15, 2025, will be crucial in defining future market sentiment.

The stock's discounted cash flow (DCF) valuation of approximately $56.54 signals the market might be overvaluing the company in current terms, potentially inflating short-term price pressures. A dividend yield of 1.01% (TTM) provides a modest return to income-focused investors, supplemented by the next dividend distribution on April 7, 2025.

Recent Developments

Recent news highlights that Walmart has pulled out of an Affirm deal in favor of a Klarna partnership. This move could signal Walmart's intention to innovate and diversify payment partners to enhance e-commerce offerings. Additionally, the exclusive product partnership with JAKKS Pacific to launch themed merchandise could leverage retail traffic, albeit amidst broader consumer confidence challenges.

Stock Performance Predictions

For the next trading day (March 31, 2025), Walmart’s recent momentum and technical indicators suggest the possibility of minor gains towards its resistance at $87.82. However, over the next week, continued concerns about consumer confidence could maintain pressure on Walmart's price, likely containing it within the mid-$80s range.

Intrinsic Value and Long-term Potential

The assessment of Walmart's DCF indicates that its intrinsic value might be below the current trading levels, suggesting overvaluation. However, long-term investment potential remains sound, supported by Walmart's strong market position in retail and continuous efforts in expanding its digital commerce and new partnerships. This long-term outlook does rely heavily on the stabilization of consumer confidence and macroeconomic factors.

Overall Evaluation

In conclusion, Walmart Inc. currently appears to be a 'Hold' candidate. While its high P/E ratio and current trading price above its intrinsic value might concern value investors, the company’s stable market position, strategic partnerships, and forthcoming earnings may balance such concerns. Investors may await further clarity from the next earnings report to reassess its growth trajectory and intrinsic valuation alignment.