![]() However, I expect this jump to be anomalous, i.e., Walmart's growth rate shall return to low single-digits (1-3%), or revert to the mean in other words, over the long term. This is visible in Walmart's latest quarterly sales, which saw a 9.3% rise in comparable-store sales and a whopping 97% jump in e-commerce revenue. Since most of their competitors were shut down by governments, the sales at companies like Walmart and Target saw a considerable uptick. Most states allowed these stores to sell non-essential goods like apparel & home furnishing. Not only did asset owners act as the primary beneficiaries of the Fed's largess, but they also acted as the primary beneficiaries of governments choosing what companies would thrive during the still lingering lockdowns. In not so many words, it arbitrarily created a business world of haves and have nots. The government-enforced shut down of non-essential stores gave an unfair advantage to some businesses like Walmart ( WMT), Amazon ( AMZN), and Target ( TGT). Estimation of fair value and expected return.Long-term financial analysis and impact of COVID-19 on recent earnings.In today's article, we will proceed in accordance with the following outline: And investors buying in at $130 would probably underperform the market over the next decade. Lastly, Walmart's stock is currently trading slightly above its intrinsic value.Walmart+ offers same-day grocery delivery and some gas discounts, but it is no match for Amazon Prime, which includes several other perks like e-books, music, and incredible video content through Prime Video. ![]() Furthermore, Walmart is rolling out its Prime competitor, Walmart+, a subscription service that could boost its e-commerce sales and customer loyalty.Walmart's robust financials fortify its dividend, and in my opinion, its operations shall provide ample dry powder to resume its buyback program in the second half of 2020.Walmart is a very mature business (low single-digit revenue growth), but it continues to deliver enhanced shareholder value by growing dividends and carrying out stock buybacks.In short, my investment thesis is centered on the following points: With that being said, Walmart's anemic organic sales growth, coupled with its share repurchase programs, should drive free cash flow per share (and therefore share price) higher. My expectation for Walmart's future growth rate for the next decade is pegged at ~1-3%, and these projections show that investors could not beat the market with new capital in Walmart today. However, the stock is slightly overpriced at $130. Now, I do see Walmart as an extremely reliable cash-flow generating business with a robust balance sheet. The big-box retailer delivered mind boggling numbers last quarter, but the boost could prove to be short-lived, and the growth could revert back to low single digits in the upcoming quarters. Walmart ( NYSE: WMT) is one of the best defensive stocks to hold during a recession due to its massive retail presence with an outsized market share in grocery.
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