Wal-Mart Stock Smashed, But Earnings Not Really Bad – Mike Swanson (02/21/2018)

Yesterday shares of WMT dumped 10% and it’s stock chart now looks like a total mess, but it’s earnings weren’t really that bad.

The company made a 4.6% increase in net profit for the fourth quarter of 2017, but announced slower online sales than expected and that made many sell.

How slow was slow?

It was 23% growth!

But in the third quarter they posted 50% growth for online sales.

It’s hard to complain about 23% growth in a company division of this size, but that’s just what the stock analysts did.

But I think there is something to take from it all.

Look at the chart.

WMT was a huge gainer in 2017 and provided a big boost to the DOW.

Take a look at the two circles I have put on the chart as that is when WMT announced earnings along with a massive buyback boost!

They did it not just once, but twice and the news drove people into the stock to chase the buying programs and it was nirvana for awhile until Tuesday.

Now the chart is broken and look’s nasty.

The real problem with WMT isn’t that it’s earnings didn’t grow fast enough, but that it is trading with a P/E over 20 and so the valuation is sky high.

When valuations are sky high so are expectations and any sign of trouble can make a stock drop.

WMT’s drop is a warning that the market may be changing this year in the coming weeks.

The DOW 1,000 dump was a siren, and now the market has rallied back up.

But it must be watched closely now and if more leader stocks blow-up in the coming weeks and months the market will be headed for tough times.

It’s a lot of cross currents now.

High valuations.
But share buybacks to boost.
Rising rates…
But predictions for economic take-off and bullish sentiment as no one is worried about anything…
Internal damage?

Keep your eyes open and stay awake!

Yesterday I posted a video about what to look for in individual stocks now for potential warning signs. Most stocks look good, but if they are acting like I showed in the vidoe then be careful. You can watch it here in this post The DOW May Be Ok Now, But Some Stocks Are Lining Up To Dump.

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