Advertisement
Markets

Wal-Mart: Watch for News

The giant retailer will be in Friday's lights when it holds its annual shareholders' meeting and then a confab with analysts. Meanwhile, the stock remains a bargain if you are patient.

This Friday is a big day for Wal-Mart investors. The world's largest retailer holds its annual stockholders' meeting in Arkansas in the morning and follows in the afternoon with a three-hour analysts' session. Both will be webcast at www.walmart.com, so if there are any surprises, they'll be live and echo worldwide.

Advertisement - Article continues below

A couple of days before the gatherings, Wal-Mart (symbol WMT) announced that May sales would be at the low end of the expected range. That, plus the market's general tumble, dragged the share price down to $48 on Tuesday. The company attributed the disappointing sales to Mother's Day coming too early this year for workers who got paid on May 15 and, once again, to the high cost of gasoline. Yet April sales were strong, and Wal-Mart shares spent most of May climbing from $45 to $50, so the energy excuse is debatable. Besides, affluent shoppers who are more annoyed than harmed by $50 fill-ups could deem it worthwhile to save a few bucks on this and that at Wal-Mart rather than pay more at a standard supermarket. And that no longer means slumming. Newer Wal-Mart Supercenters, which sell groceries, are at least as spiffy as many a Safeway or a Kroger supermarket.

Advertisement
Advertisement - Article continues below
Advertisement - Article continues below

Given that fuel isn't going to get cheaper, you might as well stop reading now if your opinion of Wal-Mart starts and stops at the gas pump -- you'll probably never buy this stock. That would be shortsighted. True, the shares are about where they were in 1999. But Wal-Mart remains a great company, and its stock is as cheap as it's ever been. The company sports a high return on equity (23%, compared with 18% ten years ago) and a historically modest price-earnings ratio of 16 (based on estimated earnings of $2.94 per share for the year ending next January).

Moreover, Wal-Mart hasn't saturated the American landscape as much as you might think it has. There are 215 Wal-Marts (including Sam's Club stores) in Florida and 194 in California. But there are more than 400 in Texas. And there are still plenty of global opportunities. China, for instance, contains just 56 Wal-Mart stores.

Maybe nothing much will emerge from Friday's sessions. But if there is news, odds are that it's more likely to be favorable than harmful.

--Jeffrey Kosnett

Advertisement

Most Popular

What Are the Income Tax Brackets for 2020 vs. 2019?
tax brackets

What Are the Income Tax Brackets for 2020 vs. 2019?

The IRS unveiled the 2020 tax brackets, and it's never too early to start planning to minimize your future tax bill.
June 20, 2020
Tax Changes and Key Amounts for the 2020 Tax Year
tax law

Tax Changes and Key Amounts for the 2020 Tax Year

Americans are facing a long list of tax changes for the 2020 tax year...and it's never too early to start thinking about next year's return.
June 22, 2020
10 Tax Breaks for the Middle Class
tax deductions

10 Tax Breaks for the Middle Class

Tax breaks aren't just for the rich. There are plenty of them that are only available to middle- and low-income Americans.
June 30, 2020

Recommended

Closing Bell 7/7/20: Nasdaq's 5-Day Win Streak Snapped
Markets

Closing Bell 7/7/20: Nasdaq's 5-Day Win Streak Snapped

A broad-market downturn Tuesday ended the Nasdaq's five-day win streak and sent economically sensitive industries to deep losses.
July 7, 2020
The Bull Run Is Over: It’s Time To Replace Luck with a Plan
investing

The Bull Run Is Over: It’s Time To Replace Luck with a Plan

It’s not hard for investors to look good during a bull market, but now comes the real test.
July 7, 2020
Closing Bell 7/6/20: U.S. Stocks Grab the Baton From China
Markets

Closing Bell 7/6/20: U.S. Stocks Grab the Baton From China

A surge in Chinese equities, as well as a massive improvement in services-sector data, lifted U.S. stocks and sent the Nasdaq to new highs Monday.
July 6, 2020
When Online Investing Turns Deadly: Lessons from a Robinhood Trader’s Suicide
investing

When Online Investing Turns Deadly: Lessons from a Robinhood Trader’s Suicide

Gamification of financial apps can make investing fun, but unsophisticated investors can get in over their heads if they aren’t careful.
July 6, 2020