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Wal-Mart Up on Vudu Unit’s Free Video Streaming Launch


Wal-Mart Stores Inc.’s WMT video on demand unit, Vudu has rolled out a free streaming service. The program called Vudu Movie on Us will allow users to stream about 1,000 movie and TV show titles for free, starting today. Shares of the retail giant gained 0.95% yesterday.

Customers can now log on to Vudu from their browsers, mobile or living room devices, and watch HD movies and TV shows like “Mad Max,” “True Grit,” “Abduction,” “School of Rock”, with no fees or subscriptions, and limited commercials. Programs can be accessed on smart TVs or through devices like Alphabet's GOOGL Google Chromecast.

Founded in 2004 and acquired by Wal-Mart in 2010, Vudu is one of the fastest-growing video on-demand services. Vudu Movies on Us is the unit’s first foray into a free, high-definition streaming option. It is aimed at attracting more subscribers to Vudu's core business that offers titles for rent or purchase, as per reports.

WAL-MART STORES Price and Consensus

WAL-MART STORES Price and Consensus | WAL-MART STORES Quote

We note that the Bentonville, AR-based Wal-Mart is leaving no stone unturned to grab a stake in the online business. In this regard, it continues to make huge investments in eCommerce initiatives, including acquisitions. Earlier in October, the company reportedly increased its stake in Chinese eCommerce website, JD.com Inc., to 10.8% from 5.9%, aiming to grab more market share in the world’s largest online market. JD.com is the second-largest online retailer in China in terms of market cap. The expanded deal with JD.com is expected to offer Wal-Mart a better chance of competing in the cut-throat retail industry in China and expand its reach in the country.

Further, the retailer has recently completed the acquisition of eCommerce company, Jet.com, Inc., which marked a huge step forward in its quest to dominate eCommerce king, Amazon.com, Inc. AMZN. Wal-Mart is also in talks to acquire a stake in India's largest eCommerce firm, Flipkart Online Services Pvt., in order to expand in the fast-growing online retail market.

Apart from acquisitions, Wal-Mart has also launched its own mobile payment system called Walmart Pay. This allows shoppers to pay through its existing smartphone app. Last month, Wal-Mart inked an agreement with CommerceHub, a leading distributed commerce network for retailers and brands, to expand its existing partnership.

However, estimates have been declining over the past 30 days despite the company reporting better-than-expected results in second-quarter fiscal 2017. While both earnings and revenues exceeded the Zacks Consensus Estimate, we note that Wal-Mart is facing several challenges. The company is exposed to intense competition on all fronts, from dollar stores to traditional grocery store chains and online business. Its international operations are also under pressure with a stronger dollar eating into sales.

Wal-Mart also expects to incur higher investments in wages and eCommerce activities over the near term. Higher labor costs, along with the company’s efforts to overhaul its stores and invest in its online operations, will weigh on earnings.

Zacks Rank

Wal-Mart currently carries a Zacks Rank #4 (Sell). A better-ranked stock in the retail industry is Tilly’s Inc. TLYS, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Tilly’s has an average positive earnings surprise of 73.74% in the trailing four quarters. It also has a long-term earnings growth rate of 15.50%.

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