Dividend Aristocrats Part 52: Wal-Mart

Wal-Mart (WMT) generated revenues of $484 billion over the last 12 months.

If Wal-Mart were a country (assuming revenue is about equal to GDP), it would be the 28th largest in the world.

Compare Wal-Mart’s 12 month sales totals to its peers:

Wal-Mart generates 165% of the sales of Target, Costco, and Amazoncombined.

Not only does Wal-Mart have more revenues than these 3 companies combined, it also has the highest profit margin.

Target, Costco, and Amazon have a collective market cap of $408 billion (around $300 billion just for Amazon), whereas Wal-Mart has a market cap of $206 billion.

Current Events – The Bad and the Good

The reason Wal-Mart is so much cheaper than its peers is because the company is anticipating declining earnings-per-share for 2 years.

This decline is due to the company raising the salaries of its employees – likely in an attempt to reduce employee turnover and stem the backlash against the company’s infamous low wages.

Wal-Mart is also investing heavily in digital sales – which are not yet profitable. This is causing a drag on company earnings. As digital sales scale, they will become profitable and supplement Wal-Mart’s profits from its physical stores.

Negative news has caused Wal-Mart’s stock price to decline by 24% over the last 12 months.

Not all news surround Wal-Mart is bad.

The company’s share price is recovering from lows. Wal-Mart stock is up over 12% in the last quarter – while the S&P 500 is down 8% over the same time period.

The company’s latest (3rd quarter) earnings release was generally positive.

Constant currency revenue grew 2.8% for the company.

Comparable store sales in United States Wal-Mart stores grew 1.5%, the 5thconsecutive quarter of increases.