Updating Walmart, Merck and Nike Shares Post-Earnings

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Merck & Company Inc Noticias

Walmart Inc,Nike Inc

Stocks Analysis by Brian Gilmartin covering: Merck & Company Inc, Walmart Inc, Nike Inc. Read Brian Gilmartin's latest article on Investing.com

) is a position that is gradually creeping up the “Top 10 Client Position” rankings, mostly from the increase in the stock price as well as purchasing more stock.

Although Sam’s Club is just 14% of total Walmart revenue and 7% of total operating profit, with an operating margin just half of Walmart US at 2.54% , the division is putting up consistently good results, after Walmart parted ways with Roz Brewer several years ago, who went to Starbucks , then landed at Walgreens, and – well – i have no idea where she is now. Sam’s CEO is doing a very good job, and the division has been successfully turned around.

Walmart’s on track to print $677 billion in revenue by fiscal January ’25 and $705 billion by January ’26. While the sell-side and Morningstar analysts thought Gardasil revenue might be the culprit, but what wasn’t said is that Keytruda is due to come off patent in mid-2028, which gives the pharma giant at least three more years to milk the growth from Keytruda, however, some of the patent work that would keep a moat around Keytruda after 2028 or at least extend the competitive protection around Keytruda, might not be developing as Merck management expected.

We sold most of the client position for all but the most tax-sensitive of accounts that still have a gain in Merck. Expected EPS growth for fiscal ’24 was +21% at one point in the last 2 years, but after the results reported in late June ’24, or the fiscal Q2 results, expected EPS growth for fiscal ’24 is now -21%.Like Merck, Nike has a lot cross-winds impacting the results: after the channel issues, there is China and it’s slowing economy not to mention the business cold war happening between the US and China, over tariffs, etc.

What worries me about Nike is Phil Knight’s age and a corporate culture that needs to be young, vibrant, energetic, and compete against the likes of Liv Dunne’s Vuori, LuluLemon, and the plethora of shoe upstarts that seem to be proliferating daily.

 

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