Attention, Walmart Investors: The Stock Has Room to Run
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What are the headline economic and workplace trends investors should know?
With your money briefing, I'm J.R. Whelan. It's been about 20 years since Wall Street had reason to take a close look at Walmart's stock. Now the stock is poised to make a big move. We'll have details in a moment. First, these money and market stories you need to know. About half of U.S. workers say they were satisfied with their jobs in 2017. That's the highest level since 2005, according to a new report from the business research group the Conference Board. Over the past seven years, Americans report feeling better about their pay, but along with a greater sense of job security, both features of an economy with a low unemployment rate and long decline in layoffs. In fact, satisfaction at work has improved for two years in a row among those with income under $75,000, while it dropped last year for those above that threshold.
That may reflect a particularly tight labor market for lower-paid workers who endured stagnant wages for years but have been seeing some faster wage gains than higher-paid workers. Meanwhile, U.S.
Who is Aaron Back and why is he discussing Walmart's stock?
corporate profits soared in the second quarter, boosted by large tax cuts and stronger economic growth than initially reported. The U.S. economy rose 16.1% from the second quarter a year earlier. That's the largest year-over-year gain in six years. And taxes, or a lack thereof, played a big role. Taxes paid by U.S.
How has Walmart transformed into an e-commerce growth story?
companies were down 33% from a year earlier, but strong underlying economic growth was also a factor. The Commerce Department revised its estimate of how fast the economy grew in the second quarter to an annual rate of 4.2% from an earlier estimate of 4.1%.
We're joined by Wall Street Journal Heard on the Street columnist Aaron Back. Walmart offers nearly any kind of household product consumers look for. But Aaron, it's been a while since we might hear the announcement, attention Walmart investors, the stock has serious growth potential.
Yeah, that's right. There's real excitement about Walmart stock right now for the first time in quite a while. And the reason why is that they are becoming an e-commerce success story. Their e-commerce sales are up on track to rise 40% this year. And all those household products that you can get at Walmart, millions of them that you can get shipped to your door for free with two-day shipping, everything from shampoo to toilet paper to all kinds of stuff like that. And they're becoming a really serious e-commerce player.
And through their acquisition of Jet.com, they're actually able to use a lot of those, a lot of delivery attributes and delivery services that are pretty attractive to consumers.
They've integrated the Jet.com technology and the Jet.com management into their core e-commerce operations at Walmart.com. So it's now a pretty slick, well-functioning website with good logistics, excellent delivery. And they're also reaching a new audience with the Jet.com acquisition of millennials living in big cities, not exactly your typical Walmart customer.
Bridging a traditional retail and more or less a more modern retail world.
What role did the Jet.com acquisition play in Walmart’s online strategy?
That's right, and I think the insight that Walmart had is that their network of super stores is an asset to them and makes them one of the few companies in the nation that can actually compete with Amazon.
You know, a point you make in your story is that even though they're having this solid growth online, it's not affecting their business in their brick-and-mortar stores.
Well, far from it. It's actually helping their brick-and-mortar stores. So they're doing something called click-and-pick or something like that where you order things online and you pick them up in the store.
Well, that's very convenient.
Well, it is for certain people. Now, you know, I mean, people who shop at Walmart anyway. OK, so I still might want to go to the store to pick out, say, fresh meat and fresh vegetables. But everything else on my list from, you know, toilet paper to, you know, dish detergent, I don't need to pick that out myself. They can have it ready for me. And on top of that, people don't always like to have things delivered to their door.
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Chapters
7 chapters
1
What are the headline economic and workplace trends investors should know?
0:05–1:01
2
Who is Aaron Back and why is he discussing Walmart's stock?
1:01–1:20
3
How has Walmart transformed into an e-commerce growth story?
1:20–3:08
4
What role did the Jet.com acquisition play in Walmart’s online strategy?
3:08–4:51
5
How does Walmart use its stores to compete with Amazon (click-and-pick explained)?
4:51–5:47
6
How do Walmart’s online prices and supplier leverage compare to competitors?
5:47–6:33
7
Why could Walmart’s e-commerce growth create significant upside for the stock?
6:33–6:37
Speakers
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