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Walmart (WMT - Free Report) is set to release fourth-quarter fiscal 2020 results on Feb 18, before market opens. Being a mega retailer, it is worth taking a look at the company’s fundamentals ahead of its results.
The stock has dropped 5.2% over the past three months, underperforming the industry’s average decline of 4.2%. The beaten down price might be a good opportunity to get into the stock given that the retailer has reasonable chances of an earnings beat and saw positive earnings revisions, which are generally a precursor to an earnings beat, ahead of its Q4 report (read: 5 Niche ETFs That Led the Market Rally Higher Last Week).
Inside Our Methodology
Walmart has a Zacks Rank #3 (Hold) and an Earnings ESP of +6.94%. According to our surprise prediction methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The stock saw solid earnings estimate revision of 3 cents over the past 7 days for the fiscal fourth quarter. Analysts increasing estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The Zacks Consensus Estimate represents a substantial year-over-year earnings growth of 8.7% for the to-be-reported quarter. Amazon’s earnings surprise history is impressive, with a beat of 11.06%, on average, in the last four quarters. Additionally, the company is expected to report revenue growth of 3.3%. The stock has a top Value Score of B and falls under a top-ranked Zacks industry (top 27%).
The Zacks Consensus Estimate for the average target price is $158.15 with nearly 78% of the analysts giving a Strong Buy or a Buy rating ahead of the company’s earnings.
What’s Hot
The mega retailer is expected to report another surge in sales growth and profitability as consumers increasingly turned online to shop for everything from electronics and toys to groceries amid the pandemic. The holiday shopping season is also expected to spur sales and profitability in the to-be-reported quarter as deals and promotions were spread across multiple stores and online events in order to avoid huge gatherings (read: 5 ETFs That Deserve a Place in Your Portfolio).
ETFs in Focus
Given this, ETFs with the highest allocation to the world's largest brick-and-mortar retailer will be in focus ahead of its earnings announcement. These funds are likely to gain if Walmart delivers an earnings beat. We have highlighted five ETFs with the highest allocation to this retailer:
Consumer Staples Select Sector SPDR Fund (XLP - Free Report)
This is the most-popular consumer staples ETF with AUM of $11.4 billion and follows the Consumer Staples Select Sector Index. The fund charges 12 bps in fees per year from investors and trades in heavy volume of nearly 9.8 million shares a day. In total, the fund holds about 32 securities in its basket with Walmart taking the second spot at 10%. From a sector perspective, household products takes the largest share at 24.7% while beverages, food and staples retailing, and food products account for a double-digit allocation each. XLP has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (see: all Consumer Staples ETFs here).
Fidelity MSCI Consumer Staples Index ETF (FSTA - Free Report)
This fund tracks the MSCI USA IMI Consumer Staples Index, holding 99 stocks in its basket. Out of these, Walmart takes the second spot with an 8.9% share. The ETF is widely diversified across beverages, household products, food and staples retailing, and food products. It has amassed $830.7 million in its asset base, while trading in a moderate volume of around 140,000 shares a day, on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #3 with a Medium risk outlook.
This fund provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index. Of these, WMT occupies the third position in the basket with an 8.8% share. The product has amassed $204.1 million in its asset base and charges 35 bps in annual fees. Volume is light as it exchanges nearly 16,000 shares per day. RTH has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
This fund manages a $5.4 billion asset base and has exposure to a basket of 96 consumer stocks by tracking the MSCI US Investable Market Consumer Staples 25/50 Index. It charges a fee of 10 bps per year and trades in a good volume of around 134,000 shares per day on average. Here, Walmart occupies the top position in the basket with a 9.1% allocation. The product is widely spread across household products, soft drinks, packaged foods & meat, and hypermarkets & supercenters that make up for a double-digit allocation each. The fund has a Zacks ETF Rank #3 with a Medium risk outlook (read: Will ETFs Gain as US Consumer Confidence Improves in January?).
First Trust Nasdaq Retail ETF
The fund follows the Nasdaq US Smart Retail Index and holds 51 stocks in its basket. WMT takes the fourth spot with 6.7% of the assets. FTXD has accumulated $7.6 million in its asset base and has an expense ratio of 0.60%. It trades in an average daily volume of 3,000 shares and has a Zacks ETF Rank #3.
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Walmart Looks to Beat Q4 Earnings: ETFs in Focus
Walmart (WMT - Free Report) is set to release fourth-quarter fiscal 2020 results on Feb 18, before market opens. Being a mega retailer, it is worth taking a look at the company’s fundamentals ahead of its results.
The stock has dropped 5.2% over the past three months, underperforming the industry’s average decline of 4.2%. The beaten down price might be a good opportunity to get into the stock given that the retailer has reasonable chances of an earnings beat and saw positive earnings revisions, which are generally a precursor to an earnings beat, ahead of its Q4 report (read: 5 Niche ETFs That Led the Market Rally Higher Last Week).
Inside Our Methodology
Walmart has a Zacks Rank #3 (Hold) and an Earnings ESP of +6.94%. According to our surprise prediction methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The stock saw solid earnings estimate revision of 3 cents over the past 7 days for the fiscal fourth quarter. Analysts increasing estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The Zacks Consensus Estimate represents a substantial year-over-year earnings growth of 8.7% for the to-be-reported quarter. Amazon’s earnings surprise history is impressive, with a beat of 11.06%, on average, in the last four quarters. Additionally, the company is expected to report revenue growth of 3.3%. The stock has a top Value Score of B and falls under a top-ranked Zacks industry (top 27%).
Walmart Inc. Price, Consensus and EPS Surprise
Walmart Inc. price-consensus-eps-surprise-chart | Walmart Inc. Quote
The Zacks Consensus Estimate for the average target price is $158.15 with nearly 78% of the analysts giving a Strong Buy or a Buy rating ahead of the company’s earnings.
What’s Hot
The mega retailer is expected to report another surge in sales growth and profitability as consumers increasingly turned online to shop for everything from electronics and toys to groceries amid the pandemic. The holiday shopping season is also expected to spur sales and profitability in the to-be-reported quarter as deals and promotions were spread across multiple stores and online events in order to avoid huge gatherings (read: 5 ETFs That Deserve a Place in Your Portfolio).
ETFs in Focus
Given this, ETFs with the highest allocation to the world's largest brick-and-mortar retailer will be in focus ahead of its earnings announcement. These funds are likely to gain if Walmart delivers an earnings beat. We have highlighted five ETFs with the highest allocation to this retailer:
Consumer Staples Select Sector SPDR Fund (XLP - Free Report)
This is the most-popular consumer staples ETF with AUM of $11.4 billion and follows the Consumer Staples Select Sector Index. The fund charges 12 bps in fees per year from investors and trades in heavy volume of nearly 9.8 million shares a day. In total, the fund holds about 32 securities in its basket with Walmart taking the second spot at 10%. From a sector perspective, household products takes the largest share at 24.7% while beverages, food and staples retailing, and food products account for a double-digit allocation each. XLP has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (see: all Consumer Staples ETFs here).
Fidelity MSCI Consumer Staples Index ETF (FSTA - Free Report)
This fund tracks the MSCI USA IMI Consumer Staples Index, holding 99 stocks in its basket. Out of these, Walmart takes the second spot with an 8.9% share. The ETF is widely diversified across beverages, household products, food and staples retailing, and food products. It has amassed $830.7 million in its asset base, while trading in a moderate volume of around 140,000 shares a day, on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #3 with a Medium risk outlook.
VanEck Vectors Retail ETF (RTH - Free Report)
This fund provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index. Of these, WMT occupies the third position in the basket with an 8.8% share. The product has amassed $204.1 million in its asset base and charges 35 bps in annual fees. Volume is light as it exchanges nearly 16,000 shares per day. RTH has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Vanguard Consumer Staples ETF (VDC - Free Report)
This fund manages a $5.4 billion asset base and has exposure to a basket of 96 consumer stocks by tracking the MSCI US Investable Market Consumer Staples 25/50 Index. It charges a fee of 10 bps per year and trades in a good volume of around 134,000 shares per day on average. Here, Walmart occupies the top position in the basket with a 9.1% allocation. The product is widely spread across household products, soft drinks, packaged foods & meat, and hypermarkets & supercenters that make up for a double-digit allocation each. The fund has a Zacks ETF Rank #3 with a Medium risk outlook (read: Will ETFs Gain as US Consumer Confidence Improves in January?).
First Trust Nasdaq Retail ETF
The fund follows the Nasdaq US Smart Retail Index and holds 51 stocks in its basket. WMT takes the fourth spot with 6.7% of the assets. FTXD has accumulated $7.6 million in its asset base and has an expense ratio of 0.60%. It trades in an average daily volume of 3,000 shares and has a Zacks ETF Rank #3.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>