Although Walmart beat Wall Street’s expectations on per-share earnings and quarterly revenue, the “Mad Money” host said institutional investors are likely focusing on the company’s declining margins, leading to weakness in the stock. The hit to gross profit rate stems from Walmart’s decision to absorb some cost increases instead of passing them on to consumers.
“But because of that anti-inflation mission, Walmart won’t earn as much money in the near-term as we thought, even as it might make more money long-haul if the new customers stick with them,” Cramer said. “Walmart’s mission may be great for its customers, but it’s given the shareholders just a beating.”
Walmart fell 0.86% during Wednesday’s session, closing at $141.94 per share, one day after tumbling 2.55%. The stock is down 4.38% over the past five days and is now lower by 1.5% for the year.
“We actually own some Walmart stock for the charitable trust. We sold some at higher levels. We’re actually itching to buy some of that stock back because I believe in Walmart’s strategy. I think it’s a smart way to take market share,” Cramer said.
Cramer faces restrictions on the timeline for potentially adding to his Walmart position. Cramer’s charitable investment trust cannot trade a stock for three days after he mentions it on a CNBC show, such as “Mad Money” or “Squawk on the Street,” a morning program which he co-hosts.
Sign up now for the CNBC Investing Club to follow Jim Cramer’s every move in the market. Disclosure: Cramer’s charitable trust owns shares of Walmart.