WMT

Thinking Slow: 3 Research Blind Spots That Changed the Investment World

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Dear members: — Daniel Kahneman in his text Thinking, Fast and Slow (1) divided the human psyche into two systems. The first system is instinctive and emotional, often set on autopilot, while the second system is slower and more logical, requiring a calculating conscious. Many of the maxims the investment world takes for granted today suffer from conclusions that are made rapidly, almost without thinking, driven by our first system, creating what I call research blind spots. — In World War II, Allied bombing raids were suffering from very high casualty rates. It was estimated that for those pilots that were flying at the beginning of the war, only about 10% survived, a terrible loss rate. Bombing was crucial to the Allied … Read more

Your Role as a Choice Architect

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“As we’ve shown time and time again, you don’t need to look far to beat the market return (or, by comparison, to have a healthy diet). If something is not on the menu at Valuentum, it means the chef has something better cooking in the kitchen.” — Dear members: — Richard Thaler in his groundbreaking book Nudge (1), co-written with Cass Sunstein, talked about the role of the choice architect. A choice architect is basically someone or some organization that has the responsibility for organizing the context and content in which people make decisions. — A good example of a choice architect might be a cafeteria worker that has to decide how to organize the food in a buffet line … Read more

Walmart Raises Outlook for Fiscal 2026

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Image Source: Walmart By Brian Nelson, CFA On August 21, Walmart (WMT) reported disappointing second quarter results that showed a beat on the top line, but a miss when it came to non-GAAP earnings per share. Revenue growth was 4.8% on a year-over-year basis, up 5.6% in constant currency. Walmart U.S. comp sales were up 4.6% (consensus was 4.1%), with strong growth in grocery and health & wellness. Operating income, however, decreased 8.2%, and up only a marginal 0.4% on an adjusted basis (constant currency). Adjusted non-GAAP earnings per share of $0.68 missed estimates by $0.06. On a global basis, eCommerce expanded 25% led by store-fulfilled pickup & delivery and marketplace. Management had the following to say about the results: … Read more

3 Undervalued Stocks to Consider Buying Now

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Dear readers:   With the markets retracing most of their recent drawdown, we’re taking a victory lap as we didn’t panic, nor should have you. We highlighted our wait-and-see approach amidst the worst of the pullback, and we expect the Magnificent 7 (large cap growth and big cap tech) to continue to propel the markets higher, as they have done.   We’ve been busy rolling valuation models as we finetune our assumptions for a great number of companies under coverage. While doing so, we came across three undervalued stocks that are also included in the simulated newsletter portfolios. We think they’re prime for highlight.   The three stocks are UnitedHealth Group (UNH), Nvidia (NVDA) and Alphabet (GOOG). We spend a lot of time on discounted cash-flow valuation, … Read more

Walmart Talks of Higher Prices Due to Tariffs; Trump Takes Exception

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By Brian Nelson, CFA On May 15, Walmart (WMT) released first quarter fiscal 2026 results that showed revenue and non-GAAP earnings per share coming in ahead of expectations. Revenue grew 2.5%, up 4% in constant currency, while operating income advanced 4.3%, or 3% when adjusted for constant currency. Walmart U.S. comp sales increased 4.5% with particular strength in health & wellness and grocery. E-commerce grew 22% thanks in part to store fulfilled pickup & delivery and marketplace and achieved profitability in the U.S. and globally in the first quarter for the first time. Though Walmart’s performance was solid in the fiscal first quarter, the Street focused on the executive team’s commentary regarding tariffs on the conference call: We will do … Read more

Magnificent 7 Earnings Reports Not Bad Thus Far

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By Brian Nelson, CFA   Shortly after Trump’s Liberation Day, where the President unveiled lofty tariffs on numerous countries, we released our wait-and-see outlook for the equity markets, which thus far has proven to be the right move, with the markets largely recovering from the depths reached in April. The S&P 500 (SPY), for example, is down just 3.3% year-to-date, excluding dividends.   A lot has happened since Liberation Day, including easing of tariffs to a 10% baseline for most, if not all, countries, with the key exception of China, where tariffs remain extremely elevated and prohibitive. Many countries are now reportedly negotiating trade agreements with the White House, and we expect China to be added to that list soon, even if … Read more

Trump Tariffs Higher than Expected; What We’re Doing

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By Brian Nelson, CFA The Trump tariff increases came in larger than what we were expecting, and it remains to be seen how they will flow through the global economy, as we monitor potential retaliatory tariffs from other countries. As it relates to the equity markets, we’re taking a wait and see approach at the moment as we monitor new policy changes related to trade, immigration, fiscal (tax), and regulations. In short, we’re not overreacting to the sell off as we won’t have a great handle on the tariff impact to companies for a few quarters when they report results post-tariff increases. That said, we’re expecting continued market volatility, with meaningful risk to the downside, before trade uncertainty alleviates in … Read more

Walmart’s Earnings Outlook Falls Short of Expectations

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Image Source: Walmart By Brian Nelson, CFA On February 20, Walmart (WMT) reported better than expected fiscal fourth quarter results, but issued guidance lower than what the Street was looking for. Revenue increased 4.1%, or 5.3% in constant currency in the quarter, while its gross margin rate advanced 53 basis points. Operating income increased $0.6 billion, or 8.3% (adjusted up 9.4% constant currency) thanks to higher gross margins, growth in membership income and improved economics in eCommerce, which grew revenue 16% led by store-fulfilled pickup and delivery. Global advertising revenue advanced 29%, including 24% for Walmart Connect in the U.S. Adjusted earnings per share came in at $0.66 in the quarter, up from $0.60 in the same period a year … Read more

Target Expects Ho Hum Holiday Results

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Image Source: Target By Brian Nelson, CFA Target (TGT) recently reported third quarter 2024 results that missed on both the top and bottom lines, and the retailer issued ho-hum guidance for the holiday fourth quarter. Third quarter comparable sales advanced 0.3% in the third quarter (versus consensus expectations of 1.5%) as strong traffic and digital performance were offset by a comparable store sales decline of 1.9%. Guest traffic grew 2.4% in the quarter, however, while digital comparable sales increased 10.8% thanks to growth in same-day delivery and drive up. Beauty comparable sales grew more than 6% in the quarter, while Food & Beverage and Essentials categories grew low-single digits compared to the same period last year. Its gross margin rate … Read more

Walmart Executing Well, Raises Guidance

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Image Source: Walmart By Brian Nelson, CFA On November 19, Walmart (WMT) reported glowing third quarter results with both revenue and non-GAAP earnings per share coming in better than the consensus forecast and the company raising its guidance. Consolidated revenue grew 5.5% in the quarter, up 6.2% in constant currency, while consolidated operating income advanced 8.2% in the period, up 9.8% in constant currency. Walmart benefited from higher gross margins, growth in membership income, and reduced losses in e-commerce. Globally, e-commerce revenue grew 27% thanks in part to increases in store-fulfilled pickup and delivery, with penetration up across all segments. Walmart U.S. comp sales increased 5.3% thanks in part to positive growth in general merchandise (transactions increased 3.1%, while average … Read more