Retailers that fail to successfully transition to e-commerce are like woolly mammoths floundering in the tar pits. Witness the death struggle of Sears Holdings (NSDQ: SHLD), which in October 2018 filed for Chapter 11 protection. Sears was a retailing legend; now it’s bankrupt. Adapt or die.

Without a doubt, online shopping is the present and future of American consumerism. The stakes are huge. Consumer spending accounts for about two-thirds of U.S. gross domestic product.

Another legacy retailer in the crosshairs of the e-commerce war is Walmart (NYSE: WMT). Like Sears, the name Walmart is an icon in consumer retail. Does Walmart face the same fate?

Founded by Sam Walton in 1962, Walmart is synonymous with bargain prices for the masses. The company’s “Big Box” stores dot the American landscape and the stock is a component of the Dow Jones Industrial Average.

As it grapples with brutal online competition, has Walmart executed the right strategic moves? Walmart unveiled fiscal fourth-quarter operating results today, before the opening bell. Below, I’ll examine the company’s earnings report card.

But first, looking at the big picture and beyond quarterly results, let’s see if “The Empire that Sam Built” makes a good investment in 2019.

What Is Walmart?

Based in Bentonville, Arkansas, Walmart operates a huge global chain of discount department and grocery stores, as well as Sam’s Club retail warehouses. Walmart boasts 11,277 stores and clubs in 27 countries, operating under 55 different names.

With a market cap of $290.4 billion, Big Box retail chain Walmart has expanded beyond bricks-and-mortar locations to embrace the booming online marketplace.

Walmart also operates a mobile payment platform, Walmart Pay, which provides discounts and other deals. The app allows customers to pay using bank accounts that are synced with a Walmart Pay account.

How Has Walmart Stock Performed?

What Is Walmart Stock History?

• Over the past 12 months, Walmart has gained 6.2% and the S&P 500 has gained 2.1%.
• Over the past two years, Walmart has gained 38.1% and the S&P 500 has gained 17.2%.
• Over the past five years, Walmart has gained 51.1%, the S&P 500 has gained 36.7%, and the benchmark SPDR S&P Retail ETF (XRT) has gained 10.2%.

How Has Walmart Performed In 2017/2018?

• In 2017, Walmart gained 43.8% and the S&P 500 gained 19.4%.
• In 2018, Walmart lost 6.3% and the S&P 500 lost 7.5%.

Who Are Walmart’s Rivals?

Amazon (NSDQ: AMZN)

Seattle, Washington-based Amazon was launched in July 1995 and since then, the online retailer has revolutionized how people shop. The company accounted for roughly 44% of all U.S. e-commerce sales in 2017, or about 4% of total retail sales in the U.S., according to data from One Click Retail.

Read This Story: Our Amazon Stock Prediction In 2019 (Buy or Sell?)

Currently sporting a market cap of $789.8 billion, Amazon started by selling books but it’s now the world’s largest online retailer, selling products from A to Z. Amazon also has become a major global provider of web-based infrastructure and cloud computing services.

Target (NYSE: TGT)

Based in Minneapolis, Minnesota, Target operates as a bricks-and-mortar and online merchandise retailer in the U.S. The market cap is $38 billion.

With a current physical store count of 1,826, the Target chain offers a wide range of products and services, including beauty and baby care products, apparel, food, jewelry, shoes, home furnishings, lighting, kitchenware, small appliances, home improvement products, automotive parts and accessories, music, movies, books, computer software, sporting goods, toys, and electronics.

Read This Story: Our Target Stock Prediction In 2019 (Buy or Sell?)

Target also offers in-store food services via Target Café and Starbucks.

Best Buy (NYSE: BBY)

Headquartered in Richfield, Minnesota, Best Buy operates about 1,500 retail stores that sell a wide variety of electronic gadgets, consumer technology products, household appliances, and sporting goods in the U.S., Canada, and Mexico.

With a market cap of $16.1 billion, Best Buy also provides services such as consultation, installation, repair, and technical support.

Will Walmart Go Up In 2019 (Should You Buy)?

Retailing has undergone a “disruption” on a sweeping scale. It’s no secret that Walmart and other bricks-and-mortar retailers such as Target and Best Buy have been pummeled by the rise of e-commerce, led by Jeff Bezos’ Amazon.

This video explains the changes wrought by e-commerce and what lies ahead.

Defying the pessimistic expectations of Wall Street and business analysts, Walmart has excelled at adapting to the online shopping revolution. The financial media have repeatedly written Walmart’s obituary, only to be proven wrong.

In fact, the company has reinvented itself as an e-commerce giant in its own right. The same can be said of Target and Best Buy; both chains have proven resilient amid e-commerce competition. But Walmart remains the world’s largest retailer.

Walmart has taken an aggressive swipe at Amazon with its revamped delivery service, known as ShippingPass. Much like Amazon’s Prime, customers of ShippingPass sign up for a subscription to the service, which promises two-day delivery on many items.

ShippingPass annually costs half of what Amazon Prime members pay. At the same time, Walmart has devoted billions of dollars to upgrading its warehouse and logistics network.

Walmart also is taking the fight to home furnishing giants such as Bed Bath & Beyond (NSDQ: BBBY). This year, Walmart expanded its furniture offerings to provide more upscale choices, a further blow to BBBY which has been struggling.

Market research firm eMarketer projects that total e-commerce sales in the U.S. will amount to $600.6 billion in 2019, a year-over-year increase of 15%. The research firm reports that Walmart last year captured about 4% of all e-commerce sales in the U.S. and 0.4% of the total U.S. retail market. Walmart is now the third largest online retailer, behind Amazon and eBay (NSDQ: EBAY).

According to eMarketer, e-commerce sales in 2017 accounted for 9% of all retail sales in the U.S. This figure is expected to reach nearly 14% in 2021 (see chart).

On February 19, Walmart reported robust operating results for its fiscal fourth quarter that beat Wall Street’s expectations on the top and bottom lines.

Walmart’s adjusted earnings per share came in at $1.41 versus $1.33 expected. Revenue reached $138.7 billion vs. $138.6 billion expected. Same-store sales in the U.S. increased 4.2% on a year-over-year basis, compared to expected growth of 3.2%. Online sales posted a year-over-year increase of 43%. Management reaffirmed its sales outlook for fiscal 2020.

Walmart’s 12-month forward price-to-earnings ratio (FPE) is 21.1, a bit pricey compared to those of Target (12.9), Best Buy (10.9), and the S&P 500 (17.5), but reasonable in light of its greater growth prospects and a bargain compared to Amazon (40.6).

Will Walmart Go Down In 2019 (Should You Sell)?

Let’s give the bear case against Walmart a fair hearing.

Headwinds against Walmart include a projected economic slowdown in 2019. When the economy goes south, the cyclical retailing industry is one of the first to feel the pain.

Indeed, the latest retail statistics are deeply troubling. The U.S. Census Bureau reported in February that retail sales fell 1.2% in December to $505.8 billion, the largest drop since September 2009. Analysts had expected retail sales to remain essentially flat. Surprisingly, online sales fell 3.9%, the most severe drop since November 2008, which was the nadir of the financial crisis.

The economic recovery is getting long in the tooth and we’re overdue for a downturn. Many analysts are predicting a recession will occur either this year or in 2020. In addition, corporate earnings are expected to slow in the first quarter of 2019.

To date, corporations in the S&P 500 have reported 13.1% earnings growth for the fourth quarter of 2018, better than the expected 12.1% gain. But the good news is about to end. For the first quarter of 2019, the average analyst expectation is for earnings to fall, which would represent the first decline in nearly three years.

Additional threats to consumer sentiment are rising interest rates and political dysfunction in Washington, DC. Falling home prices also threaten to dampen the “Wealth Effect.” When homes increase in value, consumers have greater confidence to spend. The converse is true, which is why the housing market’s flagging performance lately has investors worried.

The longest U.S. government shutdown in history is now over but investors remain rattled by the impulsiveness of the White House. President Trump’s recent declaration of a national emergency to circumvent Congress to get funding for his border wall also unnerves consumers, as well as Wall Street.

As long as the Trump regime is in power, the brinkmanship in Washington won’t end. Uncertainty of this magnitude typically dissuades consumers from spending.

Nor does technological disruption stand still. Walmart’s management has done a superb job of meeting the e-commerce challenge, but Amazon is cash-rich and adept at the early adoption of new technology.

Amazon CEO Jeff Bezos probably has more tricks up his sleeve that could blindside even nimble competitors such as Walmart. Despite its attempts to adapt to the latest e-commerce innovations, Walmart is always playing catch-up because at its core, it’s not a technology company.

Overall Walmart Forecast And Prediction For 2019

I’m siding with the bulls on Walmart.

Walmart has been aggressively ramping up its online presence. By shuttering underperforming bricks-and-mortar locations, the company has been able to plow billions of dollars into high-tech fulfillment warehouses and new delivery vehicles.

Another tailwind: Walmart’s purchase in 2016 of Chinese e-commerce platform Jet.com for $3.3 billion. This platform is expediting the company’s expansion into emerging markets, where the middle class is rising and growing more affluent.

Walmart also has been spending money to give its existing stores a much-needed makeover. Using part of its windfall from the 2017 tax cut package, the company has raised wages to motivate workers and create a more pleasant shopping ambience.

Walmart certainly can afford these efforts. The company boasts total cash of hand of nearly $9.2 billion, an ample war chest to take the fight to Amazon, as well as to Target and Best Buy.

While other Big Box stores fall by the wayside, Walmart has been able to navigate the changing retail landscape. Headline risk persists for the overall stock market, possibly spelling turbulence for retail stocks in general and Walmart in particular. But patient investors in Walmart stock are likely to be rewarded.

It’s unwise to bet against the American consumer. Shopping remains the national pastime. And as WMT’s stock performance has shown over the years, it’s unwise to bet against Walmart.

John Persinos is the managing editor of Investing Daily.