The retail industry experienced hardship at the start of the pandemic last year as it massively disrupted the global supply chain of merchandise, but many businesses bounced back adapting themselves to the rise in online shopping. While some still continue to face serious downturns as the rate of permanent store closures ramp up, the top retail players have been able to adapt, innovate. and persevere…
With people flocking to the web at unprecedented levels to order various goods, many retailers have gotten smarter about using inventory stored in stock rooms to satisfy shoppers’ digital purchases. Moreover, with a resumption of economic activities and another round of fiscal stimulus, the retail industry should soon be looking at a further increase in demand.
The trajectory of the pandemic and speedy vaccine rollout should undoubtedly shape the 2021 retail landscape. While many retail companies are still facing severe challenges to operate smoothly in this environment, retail giants like Walmart Inc. (WMT – Get Rating), Target Corporation (TGT – Get Rating), and Dollar Tree, Inc. (DLTR – Get Rating) have quickly turned the situation to their advantage by changing their product mix and supply chain. As such, these stocks should continue to reap the rewards and deliver solid returns in upcoming months.
Walmart Inc. (WMT – Get Rating)
WMT is a leading retail corporation operating in three groups — Walmart U.S., Walmart International, and Sam’s Club. The pandemic has created a huge opportunity for the company to develop its digital presence, after dominating the brick-and-mortar retail industry.
On January 29, WMT partnered with Nationwide to provide an affordable first-of-its-kind pet prescription program — Nationwide Pet Rx Express. This should help WMT increase its membership substantially by adding convenience with the streamlined claims process at Walmart pharmacies.
Also, in January, the company announced an expanded vision and new name for its media business, which is now called Walmart Connect. This new name reflects WMT’s unique ability to accelerate the connection between brands and its 150 million weekly customers. By expanding its offerings, the company is expected to create measurable value for its partners and customers in the near future.
WMT’s revenue increased 5.2% year-over-year to $134.70 billion for the third quarter that ended October 31, 2020. Operating income grew 22.5% from the year-ago value to $5.80 billion, while EPS rose 56% from the prior-year quarter to $1.81. The company’s Sam’s Club comp sales increased 11.1%, while e-commerce sales grew 41% over this period. WMT’s membership income increased 10.4%.
The consensus EPS estimate of $1.30 for the next quarter (ending April 31, 2021) indicates a 10.2% improvement from the year-ago value. Also, WMT beat the Street EPS estimates in three of the four trailing quarters, which is impressive. The consensus revenue estimate of $555.01 billion for next quarter represents a 5.9% rise in growth from the same period last year. The stock has gained 21.2% over the past year.
WMT’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A which equates to a Strong Buy in our proprietary ratings system. WMT also has a Stability Grade of A, a Value Grade of B, and a Momentum Grade of B. Of the 41 stocks in the Grocery/Big Box Retailers industry, WMT is ranked #2. The industry is strong, with a rating of A.
In total, we rate WMT on 8 different levels. Beyond what we stated above, we also have given WMT grades for Growth, Sentiment, and Quality. Get all the WMT ratings here.
Target Corporation (TGT – Get Rating)
Headquartered in Minnesota, the general merchandise retailer TGT provides home decor products, electronics, toys, seasonal offerings, and other merchandise like beauty and household essentials. The company sells its products through its stores, and digital channels, including Target.com.
On January 27, TGT announced a limited-edition collection with Levi Strauss & Co. to feature an assortment of home and lifestyle items and marking Levi’s first Home partnership. This new Levi’s for Target limited-edition collection is set to launch on February 28, 2021. This strategic partnership should allow TGT to offer its customers the very best national brands alongside their assortment of owned brands.
TGT’s total revenue has increased 21.3% year-over-year to…
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