Wall Street is impressed by Walmart's online strength — here's what major analysts had to say

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Walmart analysts are staying bullish after the company reported strong earnings before the bell. The retail giant said its ecommerce sales surged a whopping 43 percent while same store sales grew 4.2 percent over the holidays compared to last year. Many analysts say this is Walmart‘s strongest overall report in years despite last week’s steep decline in retail sales.

The company’s stock jumped as high as 4 percent in morning trading and is now trading over 3 percent at $103.76.

“WMT’s dot-com growth continues to benefit from the expansion of online grocery pickup and delivery,” Bank of America’s Robert Ohmes said. “This was the best F4Q comp performance in 15 years,” and “WMT continues to see strong performance in its US stores,” he noted.

Cowen’s Oliver Chen’s said he was, “excited,” by the results and the e-commerce growth, “was in-line with our expectations as a combination of continued curbside momentum and a broadening assortment drove strong results.”

“Overall we view the result as solid, with the U.S. comp beat most notable,” said Stifel’s Mark Astrachan. “We think it indicates the company’s strategy to invest in price and e-commerce continues to drive comp out performance.”

Analysts at Wells Fargo were slightly more subdued saying, “In the end, the quarter was very much in line with the company’s long term strategy and outlook, but the issue with the stock remains the same for us – the stock looks fairly valued given its limited growth and the lack of visibility on this changing anytime soon.”

Here’s what else analysts think:

“We are excited by overall strong 4Q19 results driven by +4.2% comps in the U.S., which yielded FY19 comps growth of +3.6% – strongest in ten years… E-comm growth of +43% was in-line with our expectations as a combination of continued curbside momentum and a broadening assortment drove strong results… We estimate curbside contributed at least or more to overall digital sales growth…”

“”WMT continues to see strong performance in its US stores… Mid-single digit % grocery comps accelerated sequentially, and the two-year grocery comp stack was the strongest in 9 years…WMT US owned ecommerce sales grew 43% (vs. our 35% forecast) and contributed 180bps to the US comp… This was consistent with F3Q US online sales growth and put WMT in line with its roughly 40% annual growth target… WMT’s dot-com growth continues to benefit from the expansion of online grocery pickup (now in ~2,100 stores) and delivery (now in 800 stores) and a broader assortment of items on Walmart.com…”

“Overall we view the result as solid, with the U.S. comp beat most notable (investors anticipated some SNAP benefit but the result was ~20-30bps above adjusted expectations)… We think it indicates the company’s strategy to invest in price and e-commerce continues to drive comp out performance… We believe WMT shares are likely to modestly outperform on the result, though with valuation limiting meaningful upside from current levels…”

“The company maintained its 2019 guidance despite unanticipated regulatory issues with Flipkart, and continues to expect low to mid-single-digit earnings growth excluding this highly dilutive transaction… In the end, the quarter was very much in line with the company’s long term strategy and outlook, but the issue with the stock remains the same for us – the stock looks fairly valued given its limited growth and the lack of visibility on this changing anytime soon…”

“As we recently outlined, Walmart’s improvements/investments in their stores, labor, technology and e-commerce capabilities continues to yield strong topline and market share benefits as the company posted a 4.2% US comp, representing a slight acceleration in both the 2-year and 3-year stacks…. We fully appreciate all of the changes that Walmart has implemented and recognize the company’s improved sales performance, but we still think it will be difficult for the stock to materially re-rate higher (from ~21x earnings) without a larger and more sustained acceleration in profit growth…”

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