Wal-Mart Stores Inc Stock Buy Recommendation Reiterated (WMT)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Wal-Mart Stores (NYSE: WMT) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+ . The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, revenue growth, notable return on equity and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 42.18% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, WMT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • WAL-MART STORES INC has improved earnings per share by 8.3% 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 $4.55 versus $4.20 in the prior year. This year, the market expects an improvement in earnings ($4.92 versus $4.55).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 13.4%. Since the same quarter one year prior, revenues slightly increased by 4.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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. 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 both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Food & Staples Retailing industry average. The net income increased by 5.7% when compared to the same quarter one year prior, going from $3,801.00 million to $4,016.00 million.

Wal-Mart Stores, Inc. operates retail stores in various formats worldwide. It operates retail stores, restaurants, discount stores, supermarkets, supercenters, hypermarkets, warehouse clubs, apparel stores, Sam's Clubs, and neighborhood markets, as well as walmart.com; and samsclub.com. The company has a P/E ratio of 15.6, equal to the average retail industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Wal-Mart Stores has a market cap of $248.68 billion and is part of the services sector and retail industry. Shares are up 23.5% year to date as of the close of trading on Friday.

You can view the full Wal-Mart Stores Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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