Will the Grinch steal Christmas from
Business: operates discount retail stores - Wal-Mart, Sam's Club, Wal-Mart SuperStores
FY 2000 Revenue: $165 billion
FY 2000 Earnings Per Share: $1.28
2001 Estimated Earnings Growth: 13%
52-Week Range: $41.44 - 70.25
Percentage Change from Jan. 1: --28%
Market Cap: $215.5 billion
P/E Multiple: 34.5
Shares Outstanding: 4.5 billion
He might be sneaking around, but Wal-Mart won't let him get a hand in their stockings. In addition to announcing meeting third-quarter earnings expectations of 31 cents a share on Tuesday, the giant discount retailer said it looked just about on target for the fourth quarter, despite the potential detrimental effects of a slowing economy on consumer spending. However, there were some Wal-Mart's earnings increased by 5.5% in the third quarter, well below their long-term average growth rate of 15%. Wal-Mart also said sales were up 13% to $45.7 billion.
But the Grinchlike economic conditions may take a bite: With the economy slowing, oil and gas prices rising, and personal spending tightening, it looks as though the retail sector, including Wal-Mart and
, might feel the pinch of a downsized holiday season.
A huge fourth quarter last year amid a booming economy led to quarterly earnings of 43 cents a share. During the quarterly conference call Tuesday morning, company executives guided analysts to expect fourth-quarter earnings within a range of 46 to 48 cents a share -- the First Call/Thomson Financial consensus estimate had been 48 cents. But is the growth slowdown a cause to worry? Morningstar analyst Mark Sellers says no, the company is just "sensitive to the broader economic condition," and will still prevail in the long run.
"The management is conservative in their financing, and I still see a lot of growth, especially international growth," for Wal-Mart, Sellers said.
The latest expansion effort that Wal-Mart has undertaken was a reconstruction of its Web site, Walmart.com. Taking the entire site off line for 28 days in October was perhaps a peculiar approach, and the reborn site has since received mixed reviews. The aesthetically basic e-tailing site lacks the luster of other sites, but perhaps the simplicity of decoration was meant to mirror Wal-Mart's physical stores and address the fact that many of their customers may not have high-end PCs that are equipped to speedily transmit bells and whistles.
The stock hasn't been impervious to the tough market this year, buckling almost 28% since Jan. 1 and 18% in the past 12 months. But it has bumped up a bit this week on the earnings report, and the stock ended the week at $48.5625. While Sellers recommends a purchase of the stock, he acknowledges that the recommendation is "not as strong as a couple weeks ago
when the share price was at $43," and that it's "on the border now" of being too pricey.
The funds below, which have big stakes in Wal-Mart, hope the house of Sam Walton can deliver like Santa this Christmas and justify the rising price.
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