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Is There Value in Wal-Mart Ahead of Earnings?

Let's not forget that the May quarter produced just 1% year-over-year growth -- reaching just $113.4 billion. What's more, the Commerce Department's most recent retail sales report showed a disappointing increase in July of only 20 basis points, with the overall total coming down more than 5% year over year.

If that weren't bad enough, these results come right after a 40 basis-point sales increase in June, which was much lower than expected.
[Read: <a target="blank" data-add-tracking="true" href=""><em>Apple's CEO Bubbling in Pressure Cooker?</em></a>]

So, when you put these results together with rising gas prices, it will take a miracle for Wal-Mart to outperform expectations, given that consumers have had less in their wallets to spend this summer. The hope here is that back-to-school shopping, which is also going on at rival stores like Target (TGT - Get Report), can be a worthwhile catalyst for Wal-Mart. But I wouldn't hold my breath.

Here again, this is where Wal-Mart's "evil" efficiency methods come into play.

In that sense, even though I don't expect a beat on revenue, I don't believe it will matter all that much - not to the extent that revenue trumps the importance of profits. Given Wal-Mart's massive global reach and its maturity level, as with McDonald's (MCD - Get Report), it is Wal-Mart's bottom line that will carry the stock.

To that end, Wal-Mart's size will continue to serve as protection, regardless of what is said in the news and in the press about the company.

The fact that shares are trading at just 13 times fiscal 2014 earnings-per-share estimates, which is almost two points below the industry average, I still believe there is decent value here in this stock. To that end, I'm sticking with my year-end $80 target on the basis of sustained market share gains and free-cash-flow growth.

At the time of publication, the author held 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 co-founder of where he serves as CEO and editor-in-chief. After 20 years in the IT industry, including 5 years as a high school computer teacher, Saintvilus decided his second act would be as a stock analyst - bringing logic from an investor's point of view. His goal is to remove the complicated aspect of investing and present it to readers in a way that makes sense.

His background in engineering has provided him with strong analytical skills. That, along with 15 years of trading and investing, has given him the tools needed to assess equities and appraise value. Richard is a Warren Buffett disciple who bases investment decisions on the quality of a company's management, growth aspects, return on equity, and price-to-earnings ratio.

His work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets.

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