Shares of Wal-Mart Stores, Inc. WMT 0.66% plunged 10 percent recently after the company issued three-year guidance that fell well short of expectations.
As Wal-Mart continues to search for ways to adapt to the modern digital age, traders are looking for ways to profit from the drop.
The Numbers
Following Wal-Mart’s Annual Meeting for the Investment Community, Sterne Agee CRT analyst Charles Grom broke down Wal-Mart’s key revelations:
- Fiscal 2015 sales growth is projected to be zero.
- Sales growth over the next three years is expected to be 3-4 percent, implying a $45-60 billion increase in revenue.
- EPS in fiscal 2016 is projected to be down 6-12 percent compared to 2015.
- Wal-Mart doesn’t expect to breach 2015 EPS levels again until 2018.
- Capex levels for 2016-2018 are projected to be flat at $11 billion annually.
- The board recently authorized a $20 billion two-year share buyback program.
Of all those details, the 6-12 percent EPS decline in 2016 was likely most troubling to the market and sent shares plunging.
The Plan
Wal-Mart acknowledged…
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