Walmart: Winning-ish in an Anti-Amazon Fight
Walmart Inc. (NYSE: WMT) had a rough end to 2018 after it never found its footing after the November 2018 earnings report. It beat estimates, but the shares slid immediately after the report and continued to slide with the weak stock market into year’s end. Closing out 2018 at $93.15, the shares have a 52-week range of $81.78 to $109.98, and the stock lost about 6% in 2018. The consensus analyst target price ended up at $107.00, for an implied gain of 14.8% in 2019, but that was without considering its 2.2% yield. The world’s largest brick-and-mortar retailer is frequently considered to be one of the few likely “Amazon-proof” retailers, and it is making its own progress in the e-commerce world as well.
Walt Disney: M&A Changes Continue Away From Mickey
Walt Disney Co. (NYSE: DIS) posted a 15% gain in 2018, far better than the 5.8% gain projected a year ago. While Disney transformed itself with acquisitions of Pixar, Marvel and Star Wars, now it has transformed itself even further via the acquisition of the 21st Century Fox assets. Disney said at its merger approval meeting in 2018 that it expected to pay a total of about $35.7 billion in cash and issue approximately 343 million new Disney shares to 21st Century Fox stockholders. The then-current 21st Century Fox stockholders were projected to own a stake of between 17% and 20% in the “New Disney.”
Disney also has a large stake in Hulu, and maybe all these changes will finally take the focus of the analyst community worrying endlessly about the ESPN trends. Shares traded at $109.65, and the $124.50 consensus target price would imply a projected gain of 13.5% in 2019, or a total return of 15.1% after adding in the 1.6% dividend yield. It should also be noted that the 52-week range of $97.68 to $120.20 shows nearly a 10% pullback from the peak.
Technical note: The Dow is a price-weighted index that is solely calculated by share prices rather than by market capitalization methods used by almost all other major indexes. Index weightings have been used for the higher priced stocks in the Dow, as a small price change in their share price is worth more than very large gains among the Dow stocks with the lowest share prices. Consensus earnings and price target data came from Thomson Reuters. The 2018 performance of shares and the dividend yields came from Finviz and Yahoo screens. Any related index weighting information on Dow stocks came from Thomson Reuters or IndexArb.
The eight lowest weightings of the 30 Dow stock make up just about 13% of the entire index weighting, versus 45% of the entire Dow’s weighting being in the eight most dominant. In general, less attention in this review was given to the Dow stocks that do not even have a 2% weighting. After all, if it’s a price-weighted index and they have low share prices, then they just won’t add up enough difference to matter.
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