(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)

Walmart Inc.'s (WMT) stock remains 15% off its highs despite a rebound in the company's shares in recent months. Now, technical analysis suggests the stock will pull back in the coming weeks, falling by about 7%. 

Analysts have been reducing their earnings estimates for the upcoming fiscal third quarter 2019, which may fuel the stock decline. Also, the shares are expensive, trading at a fiscal 2020 PE ratio of almost 20, with earnings estimated to fall next year. (See: Walmart Stock Begins Comeback After 26% Plunge.)

WMT Chart

WMT data by YCharts

The Chart is Breaking Down

The shares of Walmart have been trending lower since August. Now, the stock is sitting on a technical support level at $93.40. Should it fall below that price, the stock could drop to about $90 and refill the technical gap. The strongest level of technical support comes at around $87, which is 7% lower than the stock’s current price of about $93.50. 

The relative strength index is also bearish. After trending higher in late March, that trend is breaking down and suggests that momentum is slowing. (See: Walmart Stock Seen Rising 10% Over Short Term.)

No Growth

Walmart's weak growth outlook is getting weaker. Analysts have reduced their earnings estimates for the third quarter and now see earnings growing by 3.2%, down from previous forecasts for growth of 5%. Their revenue forecast remains unchanged and is expected to grow by an anemic 1.5%.

Historically Expensive

Fundamental Chart Chart

Fundamental Chart data by YCharts

More troublesome is that earnings growth will disappear in 2020, falling by almost 1% compared to an estimated 9% increase in 2019. Walmart's current growth outlook does not play well for the stock going forward given its current valuation. While technical indicators suggest the shares may be due for a short-term pullback, that decline could turn into something more troubling and much longer-lasting. 

Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdingsInformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.