NEW YORK (TheStreet) -- Wal-Mart (WMT - Get Report) executives presented a positive long-term outlook at the company's 20th annual investors conference on Tuesday. Among the details discussed, the retailer said in 2014 it intends to add 33 to 37 million net retail square feet, more than half within the U.S., to its current assets.
The retailer will turn its focus to small format openings and e-commerce fulfillment centers, though Wal-Mart's superstores will be mainstay. The retailer is also investing in technology to make store processes more efficient. For example, by year-end, almost two-thirds of Wal-Mart stores will offer the self-checkout option.
The shifting retail approach is expected to address a downward trend in Wal-Mart same-store sales. In the second quarter ended July 31, comparable sales declined 0.3% while a quarter earlier they dropped 1.4%. Though the rate of decline is slowing, Wal-Mart sales continue to reflect challenges facing the greater retail environment.
"We're in a tough and unpredictable global economy," said President and CEO Mike Duke. "Near-term execution is critical for us."He remained positive, however, telling the audience, "No matter what environment we're in -- today, a year from now, five years from now -- we are driven to win." Wal-Mart shares closed 0.42% lower to $74.37, leading the S&P 500 which was down 0.71%. In after-hours trading, shares have gained 0.93% to $75.06. Wal-Mart will report third-quarter earnings on November 14. TheStreet Ratings team rates Wal-Mart Stores Inc as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation: "We rate Wal-Mart Stores Inc (WMT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- WMT's revenue growth has slightly outpaced the industry average of 2.5%. Since the same quarter one year prior, revenues slightly increased by 2.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Wal-Mart Stores Inc has improved earnings per share by 5.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, Wal-Mart Stores Inc increased its bottom line by earning $5.02 a share vs. $4.55 a share in the prior year. This year, the market expects an improvement in earnings ($5.20 vs. $5.02).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Food & Staples Retailing industry and the overall market, Wal-Mart Stores Inc's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- Net operating cash flow has slightly increased to $6,357 million or 3.18% when compared to the same quarter last year. In addition, Wal-Mart Stores Inc has also modestly surpassed the industry average cash flow growth rate of -5.65%.
- The net income growth from the same quarter one year ago has exceeded that of the Food & Staples Retailing industry average, but is less than that of the S&P 500. The net income increased by 1.3% when compared to the same quarter one year prior, going from $4,016 million to $4,069 million.
- You can view the full analysis from the report here: WMT Ratings Report