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Wal-Mart Stores (WMT) Hopes to Keep Rallying

By U.S. News & World Report

Wal-Mart Stores (ticker: WMT), long the bane of the rest of the retail sector, is strangely becoming its champion. At least on one front.

If brick-and-mortar has a chance of showing that it can survive — and even thrive — in the era of Amazon.com ( AMZN), it’s Wal-Mart. The big-box retailer continues to expand its online presence and go toe-to-toe with Amazon’s many tactics and promotions. Thus, each earnings report is increasingly not just a status check on the company, but a window into just how effective its e-commerce efforts are.

Wal Mart’s first-quarter earnings announcement for fiscal 2018 — due out Thursday morning — will be no different, and that bodes well for WMT stock.

The headline numbers. If Wall Street has it right, Wal-Mart isn’t exactly looking at a scintillating quarter. Analysts expect a mere 1.6 percent bump higher in revenues, to $117.8 billion, on a small profit decline of about 2 percent to 96 cents per share.

It’s hard to put lipstick on that pig, but it’s worth noting that the expected earnings decline is thinner than in any of the previous four first quarters. Also, estimates for a slight uptick in revenues is more credit than the Street gave WMT ahead of the fiscal 2017 first quarter, which followed Wal-Mart’s first full-year revenue decline since at least 1980.

[See: 7 of the Best Stocks to Buy for 2017.]

And Deutsche Bank is at least a little more optimistic than the consensus, expecting Wal-Mart to beat its earnings mark by a penny. It also expects same-store sales of 1.6 percent (above Street views of 1.3 percent).

Wal-Mart isn’t fixed, but it is fixing things.

Online is everything. While WMT stock might jump or tumble on an earnings beat or lousy guidance, the area to watch this quarter is online sales, which now flows through the fingers of Jet.com founder Marc Lore.

Wal-Mart snapped up Amazon competitor Jet.com for $3.3 billion in August 2016. That gave WMT access not just to Jet’s monthly tally of 400,000 new shoppers and its 2,400 retail and brand partners, but also Lore himself — then CEO of Jet.com, and now head of Wal-Mart’s e-commerce efforts in the U.S.

That relationship appears to be paying dividends already, as Wal-Mart’s fourth-quarter earnings report from February showed a surge in online sales of 29 percent domestically and 15.5 percent globally. Even the top of the earnings press release — usually reserved for headline numbers or the occasional gain in comps — featured e-commerce prominently, boasting of its 36.1 percent jump in U.S. gross merchandise volume. That’s thanks in large part to Lore, who has grown the number of items on sale at Wal-Mart’s website from 8 million in 2016 to 35 million now.

When Deutsche Bank raised Wal-Mart’s price target to $81 last week, analyst Paul Trussell cited Jet.com for its increased bullishness, saying, “We think Jet.com has the potential to help position WMT as a legitimate contender versus AMZN in the long term.”

The Jet buyout set off a string of e-commerce merger and acquisition activity by Wal-Mart. Since Lore was brought on board, WMT also has purchased online outdoor retailer Moosejaw and online footwear and accessories retailer Shoebuy (via Jet), and is working toward acquiring menswear-focused Bonobos. Wal-Mart made perhaps its most outside-the-box acquisition in March when it bought Modcloth, which Mashable described as “noteworthy, since ModCloth is known for its alternative, indie vibe and size-inclusive philosophy — kind of the opposite of Wal-Mart.”

Wal-Mart also is taking direct shots at Amazon, such as killing off its Amazon Prime competitor, ShippingPass, to instead implement free two-day shipping on more than 2 million items to any customers — something Amazon only partially matched a few weeks later when it lowered the minimum order price for free standard (up to a week) shipping to non-Prime members.

WMT even filed a patent for a competitor to Amazon’s single-button ordering device, Dash. “While Dash buttons still require users to press a physical button separate from the product, Wal-Mart aims to integrate [Internet of Things] into the products themselves for automatic re-ordering with no user input at all,” data provider CB Insights says in a blog post.

[Read: The Retailers Guide to Beating Amazon.com.]

Pacific Crest’s Edward Yruma went so far as to mention Wal-Mart as a reason for downgrading Amazon back in April, saying, “We believe that Wal-Mart’s aggressive stance in e-commerce makes it a much more formidable competitor.”

Yes, there are other cogs spinning at Wal-Mart, such as an increased focus on grocery and squeezing competitors on price — strategies that Telsey Advisory Group called out in their upgrade of WMT in early April.

But the most important development to watch at Wal-Mart in Thursday’s report and beyond is online, hands down.

More Earnings in Focus

Target Corp. (TGT). While Target suffered from numerous headlines in 2016, including the “bathroom boycott” and several revenue declines, TGT shares still managed to finish the year flat. That’s not good, but it’s far better than the 23 percent drop Target has posted so far this year, heavily driven by its fourth-quarter report in February that saw the company miss on both the top and bottom lines. Expectations are low for the first quarter of 2017, due out before Wednesday’s bell. Analysts are calling for a 30 percent drop in earnings to 91 cents per share, on a 3.5 percent dip in revenues to $15.6 billion. A bearish call last week by Gordon Haskett Research Advisors didn’t help; the firm sees significant challenges from Amazon, Wal-Mart and “structural issues impacting the apparel arena.”

Salesforce.com (CRM). Salesforce’s 2017 couldn’t look any different than Target’s, with the customer relationship management specialist charging 30 percent higher in orderly fashion. CRM has been a growth machine, doubling revenues since 2014 and tripling its cash flow over the same period. Analysts are expecting more of the same when Salesforce announces its first-quarter results for fiscal 2018 on Thursday after the bell. Wall Street believes CRM will report 8 percent earnings growth to 26 cents per share, but more impressively, 22.5 percent top-line growth to $2.35 billion. Credit Suisse’s Michael Nemeroff slapped a high price target of $110 on the stock back in April, representing 30 percent upside from then and still 24 percent upside from current prices around $89.

This Week’s Earnings Calendar

Monday. Trivago ( TRVG), Vipshop Holdings ( VIPS)

Tuesday. Dick’s Sporting Goods ( DKS), Home Depot ( HD), Jack in the Box ( JACK), Manchester United PLC ( MANU), Red Robin Gourmet Burgers ( RRGB), Sina Corp. ( SINA), Staples ( SPLS), Stratasys ( SSYS), Urban Outfitters ( URBN)

Wednesday. American Eagle Outfitters ( AEO), Cisco Systems ( CSCO), Flowers Foods ( FLO), L Brands ( LB)

Thursday. Alibaba Group Holding ( BABA), Applied Materials ( AMAT), Autodesk ( ADSK), Gap ( GPS), McKesson Corp. ( MCK), Ralph Lauren Corp. ( RL)

[See: 7 Horrendous Dividend Stocks to Actively Avoid.]

Friday. Campbell Soup Co. ( CPB), Deere & Co. ( DE), Foot Locker ( FL)

More from U.S. News

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Wal-Mart Stores (WMT) Hopes to Keep Rallying originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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