Walmart share price forecast: is it a buy or sell in 2020?
08:45, 19 February 2020
It is hard to find someone who would argue that 2019 was a great year for US retail. Actually it was a real apocalypse, with all the headlines declaring the demise of the industry as we know it.
Across the US market, store closures have surpassed store openings. Retail foot traffic in both stand-alone shops and malls remains on a descending trajectory. The industry is littered with bankruptcies: in the past two and a half years the number has exceeded 40, with more looming large on the horizon.
So, does it mean traditional retail is dead?
In this article, we try to figure out whether it is the right time to invest in the US retail sector and take a closer look at one of the country’s largest businesses in the industry – Walmart (WMT). Below, we cover the company’s basics, check its historical stock performance and discover what the latest Walmart stock predictions look like.
What is Walmart and where does it stand within the industry?
Walmart, Inc. (WMT) is an American multinational retail corporation that runs a chain of discount department stores, grocery stores and hypermarkets. Headquartered in Bentonville, Arkansas, the company has over 11,400 stores and clubs in about 27 countries. It operates under 55 different names, including Asda in the UK, Best Price in India and Seiyu Group in Japan.
In 2019, according to the Fortune Global 500 list, Walmart was the world's largest company by revenue, with a mammoth $514.4 billion. It also was the largest US grocery retailer, with 65 per cent of its $510.3 billion sales coming from the US operations. Moreover, Walmart is known as the globe’s largest private employer, with 2.2 million working for the brand.
If only things were that easy. Today, this retailing behemoth is engaged in an ongoing fight to grow earnings amid fierce competition with rapidly emerging e-commerce giants like Amazon (AMZN).
While the surge of online stores has injected much-needed life into the global economy, it has also led to the inevitable death of many brick-and-mortar brands.
Investment bank UBS believes that due to the growing interest in online shopping another 75,000 stores could be closed by 2026.
But Walmart is not one to sit on its hands. Despite being founded half a century ago, the company's e-commerce sales have been soaring with the strong performance of Walmart.com and online Walmart Grocery. However, the vast majority of revenue is still coming from its physical stores.
Meanwhile, Amazon has already stepped up its offline retail game, acquiring Whole Foods chain for $13.4 billion in 2017. This move has vastly increased the company’s presence in the brick-and-mortar market.
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Walmart stock price analysis: splendid growth through the decades
As with any other company, there are a few factors that influence the Walmart share price. The most obvious ones include quarterly earnings reports and the financial performance of the wider stock market. Moreover, the value of Walmart stock is heavily influenced by growing competition in the retail industry.
Let's take a look at the Walmart stock performance since it started trading on the NYSE:
Walmart went public on October 1, 1970. Back then, it issued 300,000 shares priced at $16.50 each. The company's common stock began trading on the New York Stock Exchange under the ticker symbol WMT on August 25, 1972.
At its IPO pricing, Walmart’s initial market capitalisation stood at around $5 million, which translates into about $31 million in today's dollars. Now, the business is worth over $334 billion, making it fair to say that a WMT investment has outpaced both inflation and the broader stock market.
Over the years of trade, the Walmart share price has been mainly in the uptrend. The company’s success attracted impressive buying interest, generating steady upside that persisted into a breakout in 2019. The stock peaked a record-high of $121.28 per share on December 17, 2019.
The price rally reversed shortly after that, with the WMT share price falling as low as $114.27 by February 3, 2020. At the time of writing, February 18, the company traded at $117.89 per share.
How is Walmart planning to win the retail game in the years ahead?
Famous for its huge bricks-and-mortar stores, the business has made a concerted effort to stay on top of the internet revolution in recent years. Walmart has been offering online options to its customers for some time now, continuously looking for new opportunities to innovate how their products are accessed.
For example, as soon as Amazon announced a move to one-day free shipping for its Prime members, Walmart struck back offering free, next-day delivery for minimum orders of $35 with no membership fee.
The business hopes to use cutting-edge computing to crunch customer data quicker than in the cloud. In addition, it is planning to capitalise on its extensive customer data to sell online advertising.
The firm has also been trying to expand its presence in rapidly growing economies like China and India. In 2018, Walmart outbid Amazon for Flipkart, sealing a $16 billion deal for the Indian e-commerce company.
In November 2019, the company’s CEO Doug McMillon told CNBC: “We’re making progress on many fronts, but we need to do more and move faster, especially with our assortment including marketplace.”
He added: “We’re committed to progress and building a larger, healthier e-commerce business. Our customers want that, our marketplace sellers want that, and so do we.
The company’s online efforts seem to be succeeding. After all, Walmarts' US e-commerce growth of 37 per cent in Q2, 41 per cent in Q3 and 35 per cent in Q4 looks rather impressive.
Even though online retail is gaining popularity, real-life shops still matter. And that is where Walmart holds a key advantage over Amazon. While the latter may have its sights set on brick-and-mortar stores, Walmart is already there, at the top of the game, owning thousands of stores across the globe.
Therefore, Walmart is currently looking for opportunities to bring the in-store and online arms of its business together to offer customers unique ways to access its products and services.
With the business operating in such a stiff environment, many investors now wonder: Will Walmart stock go up higher in 2020? What is the Walmart stock: buy or sell?
Walmart share price forecast: where is the WMT stock heading next?
Many experts believe the retail business will keep expanding at a rapid pace. But what about Walmart in particular?
Let’s recap what the latest Walmart stock price predictions look like.
According to the information provided by CNN Business, 30 analysts have offered their 12-month price forecasts for Walmart. Their median target is set at $130, with a low estimate of $105 and a high estimate of $155. The current consensus among the analysts is to buy the stock.
Wallet Investor, a popular online forecasting service, offers a bullish Walmart share price forecast. Referred to as a “good long-term investment”, the stock is expected to hit $195 per share by mid-February 2025. Therefore, if you decide to invest in it today, the revenue in five years is predicted to be around +65.68 per cent.
In one year, they forecast the company’s shares to trade at $133.
Based on an internal deep learning algorithm, Gov Capital provides the most optimistic Walmart stock projection of all. Upon their estimates, the stock could reach a mind-boggling price of $664 in five years’ time.
Here is their Walmart share price prediction for 2020:
The WMT stock analysis conducted by TradingView.com shows real-time ratings for the company for one month. Here are the results:
However, while the Walmart stock price forecast looks promising, much depends on the future developments in the retail industry and whether or not the company will be able to remain at the forefront of these changes.
You can always follow the latest Walmart share price news at Capital.com.
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