Tuesday, October 04, 2011

Wal Mart (WMT) 2011 Review


Wal-Mart Stores (WMT) is the world’s largest retailer operating 891 discount stores, 2,747 super centers, 596 Sam’s Clubs, 158 Neighborhood Markets in the US and 4112 foreign stores in Latin America, Canada, Europe and Asia. The company has grown profits and dividends at a 12-16% annualized pace over the last 10 years earning a 20% return on equity. The company should continue to turn in above average results as a result of :

(1) improvement in productivity resulting from expanding international markets, in particular China where it is growing at a 30% annual rate,

(2) a positive impact on costs given management’s ability to ‘buy for less’,

(3) a plan to bring back thousands of products in an effort to recapture missed sales and repair vendor relations,


Negatives:

(1) a declining rate of growth in the US,

(2) the potential for price inflation in consumer goods,

(3) its exposure to foreign laws and regulations as well as currency fluctuations.

WMT is rated A++ by Value Line, carries a 38% debt to equity ratio and its stock yields 2.7%.

Wal-Mart Stores is the world’s largest retailer operating 891 discount stores, 2,747 super centers, 596 Sam’s Clubs, 158 Neighborhood Markets in the US and 4112 foreign stores in Latin America, Canada, Europe and Asia. The company has grown profits and dividends at a 12-16% annualized pace over the last 10 years earning a 20% return on equity. The company should continue to turn in above average results as a result of :

(1) improvement in productivity resulting from expanding international markets, in particular China where it is growing at a 30% annual rate,

(2) a positive impact on costs given management’s ability to ‘buy for less’,

(3) a plan to bring back thousands of products in an effort to recapture missed sales and repair vendor relations,

Negatives:

(1) a declining rate of growth in the US,

(2) the potential for price inflation in consumer goods,

(3) its exposure to foreign laws and regulations as well as currency fluctuations.

WMT is rated A++ by Value Line, carries a 38% debt to equity ratio and its stock yields 2.7%.

Statistical Summary

Stock Yield Dividend Growth Rate Payout Ratio # Increases Since 2001
WMT 2.7% 10%
34%

10
IND 1.5 9 25 NA

Debt/Equity ROE EPS Down Since 2001 Net Margin Value Line Rating
WMT
38%
20% 0
4%

A++
IND
50

18

NA

3

NA

Chart

Note: WMT stock made steady progress off its March 2009 low, quickly surpassing the down trend off its September 2008 (red line). But it has never successfully challenged the November 2008 trading high (green line). Long term, WMT is in a trading range--the straight blue line is the upper boundary of that trend. Intermediate term, the stock is in an up trend (purple lines). The wiggly blue line is on balance volume. The Dividend Growth Portfolio does not own WMT by virtue of having Sold its position at $55 and reinvested the proceeds in TGT.



http://finance.yahoo.com/q?s=WMT
10/11

Chart

Note: WMT stock made steady progress off its March 2009 low, quickly surpassing the down trend off its September 2008 (red line). But it has never successfully challenged the November 2008 trading high (green line). Long term, WMT is in a trading range--the straight blue line is the upper boundary of that trend. Intermediate term, the stock is in an up trend (purple lines). The wiggly blue line is on balance volume. The Dividend Growth Portfolio does not own WMT by virtue of having Sold its position at $55 and reinvested the proceeds in TGT.

http://finance.yahoo.com/q?s=WMT
10/11