Some shareholders may have gotten upset with Walmart’s (NYSE:WMT) management at its 22nd annual investors meeting, held on the 20th of October. The company, late in the game it seems, has decided to really invest in the online channel. This coupled with a stronger dollar, higher US wages and deflationary trends across its food segments all point to lower earnings right up until 2019 despite revenues predicted to grow in the interim period.

Walmart earnings Q3 2016 are expected to come in at $0.98 per share on revenues of $117.88 billion compared to an EPS of $1.15 on $119 billion for the same quarter 12 months ago. Investors have turned bearish on this stock but maybe a tad unfairly, especially when you look at the financials. Why? Because Wal-Mart feels that its online channel will grow rapidly (already growing between 20 to 30%) over the next few years despite probably being in the red until 2018.

The obvious advantage the company has here over online retailers are the stores and fulfillment centers (5000 stores and 150 fulfillment centers in the US alone) it runs. Apart from the obvious brick and mortar advantage of its business model, I just feel that this retailer may surprise investors in the quarters to come when it announces earnings for a variety of reasons. Why?

Firstly, let’s take a look back at the company’s numbers in the last quarter. The company beat on revenues but missed on the bottom line ($1.08 EPS reported compared to the predicted $1.12). As a result of the earnings miss, the stock sold off by more than 3% but unfortunately the losses were compounded the day after (19th August) when the S&P500 lost 150 handles. The S&P500 has since recovered but Wal-Mart has not. Then we had the annual investors meeting on the 20th of October last when management reported that earnings would be stifled until 2019 which again tanked the share price. So all of the above has meant that the stock is down almost 20% in price since the 18th of August (see chart).

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