This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Have Weak Sales Hurt Wal-Mart's Value?

The question here is, how much of Wal-Mart's first-quarter results should be blamed on recent macro events such as the 2% increase in the Social Security payroll tax rolled out at the beginning of the year? Not to mention there was the delay in income tax refunds; the company warned back in January that its earnings results may be adversely affected.

These two events point to one thing: consumer spending, which always matters to Wal-Mart. While the 2% decline in store traffic is discouraging, investors realize that "this is Wal-Mart." What I mean is, we've been here before and the company has overcome much worse. The fact is people aren't going to suddenly stop shopping for food and household goods. Not many stores can compete with Wal-Mart on pricing and convenience.

For that matter, management said Wal-Mart was able to gain market share in categories like food, consumable and health and wellness products. This is the second consecutive quarter in which Wal-Mart has done so.

Management also expects modest improvements going forward as earnings-per-share guidance for the second-quarter expected to come in the range of $1.22 to $1.27, which represents year-over-year growth of 3% to 7%.

Bottom Line

Macro concerns can weigh heavily on Wal-Mart, which would then impact upon the stock. But given the company's immense size, which serves as protection, the shares are not going to sway that drastically from one quarter to the next. Besides, Wal-Mart doesn't always get the credit it deserves for operating one of the most efficient businesses in the world.

The fact that shares are trading at just 13 times fiscal 2014 EPS estimates, which is almost two points below the industry P/E average, presents not great but decent value. The stock's 16% year-to-date gains notwithstanding, over the course of the next six to 12 months, investors should expect additional gains of 5% to 7%.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Richard Saintvilus is a private investor with an information technology and engineering background and the founder and producer of the investor Web site Saint's Sense. He has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
WMT $65.88 0.86%
AAPL $94.11 0.44%
FB $102.69 0.77%
GOOG $687.24 0.60%
TSLA $150.43 -0.03%


Chart of I:DJI
DOW 15,897.75 +237.57 1.52%
S&P 500 1,858.13 +29.05 1.59%
NASDAQ 4,326.7320 +59.8950 1.40%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs