Latest news with #JohnRainey
Yahoo
27-05-2025
- Business
- Yahoo
Target Stock Looks Cheap but It May Be a Bargain Today for a Much Better Reason
Target's stock has dropped to cheap levels because of slumping sales and worries over higher costs. Investors could be under-appreciating this one opportunity that's already boosting profits for Target's top peers in the retail space. 10 stocks we like better than Target › The words "cheap" and "bargain" might look like synonyms. But as I'm using them, the difference has everything to do with the future. Well-know retailer Target (NYSE: TGT) trades at just 11 times its earnings, which is about 60% cheaper than the S&P 500, which trades at about 28 times earnings, according to YCharts. But it's not a good idea to invest in a stock simply because it looks cheap. If Target's profits drop further, this cheap stock likely isn't a bargain. In other words, Target stock is "cheap" when compared to the valuation of the S&P 500, meaning it's merely less expensive right now. By contrast, the term "bargain" causes me to consider the quality of the business, not just the price. But it's precisely the quality of Target's business that's in question right now. Consider that Target's revenue peaked about two years ago, and management expects another low-single-digit decline here in 2025. Moreover, its earnings per share (EPS) peaked three years ago. And this year, management is guiding for EPS of $8 to $10, which is a wide range, reflecting a lot of uncertainty with the business. The situation is complicated yet my assertion is simple: If Target materially grows its earnings in coming years, then the current price is a bargain. Consider that it looks cheap today based on the currently suppressed earnings. Therefore, things would get quite interesting if earnings went up from here. And believe it or not, Target has low-hanging fruit to increase profitability and most investors don't even know about it. The largest brick-and-mortar retail chain in the world is Walmart (NYSE: WMT) -- everyone knows that it sells physical products in physical stores. What investors might not know is that Walmart has a growing digital business that's boosting its profitability. Walmart's digital business has multiple components. It has an e-commerce website, which enables high-margin third-party sales in addition to first-party sales. It sells memberships to its subscription product Walmart+. And it leverages this digital scale into a skyrocketing advertising business. In the first quarter of its fiscal 2026, for example, revenue for Walmart's advertising business jumped 50% year over year. According to CFO John Rainey, about 25% of Walmart's profits right now come from its memberships and its advertising business. Keep in mind that this digital push for the company is relatively recent. To already constitute one-quarter of profits after just a few years is huge. This is the playbook that massive brick-and-mortar businesses are using right now to boost profitability. Walmart is a good example. But businesses such as Costco and Kroger are doing it too. Target is later to the digital game but it's low-hanging fruit to boost profitability. Its subscription service Target Circle 360 launched about one year ago and is helping boost the digital business. In the first quarter of 2025, comparable sales in its stores were down about 6% year over year whereas its digital comparable sales were up about 5%. The digital business is one of the few things growing for Target, and it has multiple avenues for this. First, it has a retail media business called Roundel. This is a way for Target to take its data and partner with brands to deliver personalized advertising. Second, it has Target Plus, which allows third-party merchants to sell on Target's e-commerce platform. Again, this is no different from what Walmart or even Amazon does. So it's not a revolutionary idea. But it's an idea that's proven to boost revenue and profits. Unfortunately, Target's digital efforts are so young that its shareholders don't have perfect visibility into these numbers right now. But the little that can be known is promising. Target's first-quarter advertising revenue was up 25% year over year to $163 million. Compared to overall Q1 net sales of $24 billion, that's still small. But it has to start somewhere. Moreover, management says that both Roundel and Target Plus enjoyed "double-digit growth" in Q1. That could mean 10% or it could mean 99% -- investors can't be sure. But either way, double-digit growth is encouraging. To be clear, Target is facing headwinds when it comes to sales. And it's grappling with potentially higher expenses in light of new import tariffs. So there are things that can drag its profits down further. That said, other prominent retailers have succeeded by investing in digital growth. Target is now investing in digital growth and experiencing a measure of success. Therefore, it's not far-fetched to believe it can boost its earnings in this way. And if it does, the stock is an absolute bargain worth buying today. Before you buy stock in Target, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Target wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $639,271!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $804,688!* Now, it's worth noting Stock Advisor's total average return is 957% — a market-crushing outperformance compared to 167% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, Target, and Walmart. The Motley Fool recommends Kroger. The Motley Fool has a disclosure policy. Target Stock Looks Cheap but It May Be a Bargain Today for a Much Better Reason was originally published by The Motley Fool
Yahoo
15-05-2025
- Business
- Yahoo
Stocks close mixed Thursday as tariffs continue to weigh on sentiment
Stocks started off negative but rose modestly higher Thursday. Government data continued to show a positive economic picture even as major retailers warned of the negative drag of tariffs. Stocks drifted higher on Thursday as investors digested a package of contradictory developments on consumer spending and foreign investment. The S&P 500 gained 0.4%. The Dow rose 271 points, or 0.7%, while the tech-heavy Nasdaq lost 0.2%. Earlier on Thursday, Walmart issued a warning that prices would likely rise on Trump's tariffs against China, despite a reduction in the level of import taxes this weekend from 145% to 30%. The retailer previously pulled earnings guidance in the face of tariff uncertainty. 'The magnitude of these increases is more than any retailer can absorb," CFO John Rainey told CNBC. Walmart's stock fell 0.9%. Dick's Sporting Goods fell 14.6% after news the chain was looking to merge with Foot Locker. UnitedHealth lost 11.3% on a report that the government was investigating the insurer for possible Medicare fraud. Government data revealed consumers ramped up spending in April to get ahead of increased tariffs, although the shopping spree is coming to an end. Fewer Americans were applying for jobless aid than expected, and wholesale inflation appeared better. Fed Chair Jerome Powell on Thursday warned the economy could be entering a new phase with more "supply shocks" and "volatile inflation." This story was originally featured on Sign in to access your portfolio
Yahoo
15-05-2025
- Business
- Yahoo
Walmart Earnings: Price Hikes Are Coming
Walmart beat analyst expectations across the board and maintained its full-year outlook despite tariffs. Solid U.S. comparable sales growth boosted the company's results, and Sam's Club continued to perform well. The company warned about higher prices later this month due to tariffs, which will have an unknown impact on its sales and profits. 10 stocks we like better than Walmart › Here's our initial take on Walmart's (NYSE: WMT) financial report. Metric Q1 FY 2025 Q1 FY 2026 Change vs. Expectations Revenue $161.5 billion $165.6 billion +2.5% Beat Earnings per share (adjusted) $0.60 $0.61 +1.7% Beat U.S. comparable sales growth (ex. fuel) 3.8% 4.5% +0.7 pp n/a E-commerce growth 21% 22% +1 pp n/a Walmart reported strong results for the first quarter of fiscal 2026, beating analyst estimates for revenue and earnings while maintaining its outlook for the full year. However, the company warned that the impact of U.S. tariffs would force it to raise prices toward the end of May, which could have a negative impact on sales. Walmart's total revenue grew by 2.5% year over year in the first quarter, or by 4% adjusted for currency. Global e-commerce sales were up 22%, while global advertising sales soared 50%, partly due to the acquisition of VIZIO. Sales in the U.S. were up 3.2% on comparable sales growth of 4.5%, and sales in international markets declined slightly. In the Sam's Club segment, comparable sales growth of 6.7% drove overall sales growth of 2.9%. For the second quarter, Walmart expects its revenue to rise by between 3.5% and 4.5% year over year. The company provided a guidance range due to uncertainty related to tariffs, and it didn't issue guidance for earnings for the same reason. For the full year, Walmart reiterated its guidance, which calls for revenue growth between 3% and 4% and adjusted EPS between $2.50 and $2.60. Walmart maintained its outlook despite the fact that the company will have to raise prices in response to tariffs. Walmart CFO John Rainey noted that the magnitude of U.S. tariffs was more than any retailer or supplier can absorb. Higher prices will become more noticeable by the end of May, with an uncertain impact on consumer behavior. Shares of Walmart were largely unchanged in premarket trading following the release of the first-quarter report. Walmart beat analyst estimates across the board, and the reiteration of its full-year guidance likely reassured investors to a degree. However, the uncertainty surrounding tariffs and the impact on consumer spending remains high. Walmart is more able to absorb some tariff impacts than other retailers, and it can pressure suppliers to do the same. The company's scale gives it an advantage over its smaller competitors as it aims to keep prices as low as possible. However, if higher prices from tariffs knock down consumer spending and ultimately lead to an economic slowdown, Walmart won't be immune and may have trouble hitting its full-year outlook. The picture will become more clear a few months from now when Walmart reports its second-quarter results. Full earnings report Investor relations page Before you buy stock in Walmart, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Walmart wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $620,719!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $829,511!* Now, it's worth noting Stock Advisor's total average return is 962% — a market-crushing outperformance compared to 170% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 12, 2025 Timothy Green has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walmart. The Motley Fool has a disclosure policy. Walmart Earnings: Price Hikes Are Coming was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
05-05-2025
- Business
- Yahoo
Why Walmart Stock Jumped 11% in April
Walmart has been enjoying robust growth driven by a boost in e-commerce. It provided positive updates about its business potential and stance on tariffs at its annual shareholders' meeting. Walmart stock pays a reliable and growing dividend. Walmart (NYSE: WMT) stock gained 11% in April, according to data provided by S&P Global Market Intelligence. Investors are flocking to what they see as a safe stock in the new tariff environment, and this call was bolstered by updates at the company's annual shareholders' meeting, where management shared recent successes. Walmart has been enjoying strong growth recently, particularly in its e-commerce business, which is driving growth across the business. It's the largest retailer in the world, with more than 10,000 stores globally, nearly half in the U.S., and it happens to be a discount retailer, which makes it even more attractive when there's inflation. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » In the 2025 fiscal fourth quarter (ended Jan. 31), sales increased 5.3% (currency neutral) over last year, with operating income up 9.4%. Sales growth was driven by e-commerce, which was up 16% year over year. It was late to the e-commerce game, but it's finally leveraging its assets, meaning its stores, to beat out other e-commerce retailers. It's using its huge stores as distribution centers, and its unmatched portfolio count means it can get goods to customers fast and at a low cost. E-commerce sales increased 21% for the full year. Management is taking a confident stance on tariffs. "History tells us that when we lean into these periods of uncertainty, Walmart emerges on the other side with greater share and a stronger business," said CFO John Rainey. The company gave a positive outlook at the investor meeting, where it identified ways to drive growth through offering more value and leaning into technology. It sees the potential to widen margins as it grows its high-incremental-margin businesses, and it outlined a plan to generate higher cash flow and create greater shareholder value. Walmart pays a growing dividend that yields 0.9% at the current price. That's pretty low because it moves conversely with the stock price, and the stock has been on fire. It's risen so high that it trades at a P/E ratio of 41, which is much higher than the typical safe stock. Investors see a rare combination of growth and security in Walmart stock, plus the dividend, which makes the stock look very attractive in today's environment. At this price, I wouldn't make Walmart a central position in your portfolio, but it's a strong contender if you're looking for a stable, dividend-paying stock. Before you buy stock in Walmart, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Walmart wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $623,685!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $701,781!* Now, it's worth noting Stock Advisor's total average return is 906% — a market-crushing outperformance compared to 164% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 5, 2025 Jennifer Saibil has positions in Walmart. The Motley Fool has positions in and recommends Walmart. The Motley Fool has a disclosure policy. Why Walmart Stock Jumped 11% in April was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
22-04-2025
- Business
- Yahoo
Should You Buy Walmart Stock With $1,000 and Hold Forever?
Walmart (NYSE: WMT) is a retailing behemoth. It has almost 11,000 stores worldwide. In Q4 2025 (ended Jan. 31), it generated $181 billion in revenue. It currently sports a monster $748 billion market cap. This retail stock is up 112% in the past five years. In the past 12 months, shares have jumped 56%, crushing the 5% gain of the S&P 500 index (as of April 17). Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Along with the overall market, Walmart is facing downward pressure, with shares off 11% from their peak (as of April 17). Is now the time to invest $1,000 in the Arkansas-based business and hold it forever? Walmart's ubiquity, convenience, and consistently low prices on a massive number of items make it popular. The business registers durable demand trends that should be the envy of the entire retail sector. This is never more apparent than with one critical metric: same-store sales (SSS). During the latest fiscal quarter, Walmart's SSS in the U.S. increased 4.6% year over year. This was at least the 24th straight quarter that a positive metric was reported. That track record highlights Walmart's ability to handle whatever economic headwinds are thrown its way. In the past few years, Walmart has found new ways to make money. In fiscal 2025, advertising revenue surged 27% to $4.4 billion as more marketplace merchants used the tools available. Membership revenue, from Walmart+ and Sam's Club, soared 17% in Q4. "Our membership programs, both Sam's Club and W+, have been very popular with our customers and members, and their growth, especially W+, is helping expand our customer base and increase customer loyalty," CFO John Rainey recently said during an investor presentation. Of course, one challenge to continuing success for Walmart in these new areas is the competitive landscape. Amazon has developed a strong position in online shopping, primarily with its wildly successful Prime membership, as well as in digital advertising. However, Walmart is starting from a much lower base, so it has significant potential for growth. The retail sector is extremely competitive, but Walmart has a wide economic moat that allows it to compete effectively and maintain financial strength. Perhaps the biggest competitive advantage working in Walmart's favor is its scale, which provides cost efficiencies. Buying gargantuan quantities of goods from suppliers gives the company tremendous negotiating leverage. These savings are then passed to consumers. Investors who want to own stocks forever need to think critically about factors that could cause disruption to a business or force it to become obsolete. Walmart's leading position in the industry, importance to hundreds of millions of shoppers weekly, and ability to drive new revenue sources should give anyone confidence about the company's staying power. Walmart stock's performance in the past year is impressive. But what about its valuation? The current P/E ratio is 38.7, substantially higher than the trailing-five-year and trailing-10-year averages. The multiple will likely contract in the future, introducing an obstacle to adequate investment returns. To its credit, though, Walmart has raised its dividend for 52 consecutive years. And the leadership team's focus on stock buybacks has reduced the diluted outstanding share count by 6% in the past five years. Capital returns like this are great, but they still don't change my conclusion that investors shouldn't buy Walmart stock with $1,000 right now. Before you buy stock in Walmart, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Walmart wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $524,747!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $622,041!* Now, it's worth noting Stock Advisor's total average return is 792% — a market-crushing outperformance compared to 153% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 21, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Walmart. The Motley Fool has a disclosure policy. Should You Buy Walmart Stock With $1,000 and Hold Forever? was originally published by The Motley Fool Sign in to access your portfolio
