This behemoth with a market cap of over $242 billion has had a great run over the past year, as the chart below demonstrates. I've included a line on the stock's PEG ratio for general interest. Currently, the five-year expected PEG ratio is around 1.73, which doesn't make WMT exactly a bargain at current levels.
WMT data by YCharts
The bottom line: Wal-Mart's price and PEG ratio, by technical standards, is somewhat over-extended. That doesn't mean the stock may not exceed the 52-week high of $75.24 if the second-quarter numbers are much better than expected and/or next quarter's guidance is ebullient.
During its second quarter WMT did all it could to counter the negative impact of a slowing economy and reduced consumer spending. It also tried to help its growth by opening more of its Neighborhood Market grocery stores.Since 1998 the company has expanded this division from its very first Neighborhood Market to 199 stores today. Eighty of those grocery stores were added in this fiscal year alone. With its first Wal-Mart Express store opening last year, WMT is trying to win back some business it has been gradually losing to dollar stores like Dollar Tree (DLTR). The smaller Express stores have worked well for WMT in international areas including Brazil and United Kingdom. Wal-Mart hopes to expand its footprint and presence in China, the country where many of the products sold at WMT are either made or assembled. The second quarter saw some embarrassment for WMT, as it was during that time period it was accused of using bribery to expand its Mexican operations. The accusations included a yet-unproven charge the powerhouse tried to cover up the corruption. Reportedly both the U.S. and Mexico are investigating. Despite the charges of wrongdoing and company admissions of needing to improve on their productivity, WMT shares (as the chart above illustrates) have had an even better performance in the past two quarters.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV