Shopping for Value? Checkout Wal-Mart Stock Ahead of Earnings

NEW YORK (The Street) -- You lose if you do, you lose if you don't. That seems to be the case with any decision made by Wal-Mart  (WMT) management, which will announce fiscal first-quarter 2016 earnings Tuesday before the opening bell.

The world's largest retailer is thinking beyond its big box, offering a new subscription shipping service due out later this summer. Code-named "Tahoe," Wal-Mart will provide unlimited shipping on about 1 million qualified products for $50 a year, or half of what Amazon  (AMZNcharges for its Prime service. It's a gimmick, if you believe the critics, questioning whether this service will make a dent in Wal-Mart's revenue.

The Bentonville, Arkansas-based retailer has also taken a public lashing for under-paying its workers. The company responded, raising its entry level wages to $9 an hour. Wal-Mart also promised to hike the rate up to -- at minimum -- $10 per hour by February 2016, committing to spend roughly $1 billion on salaries for 500,000 workers at its U.S. stores.

Now, the critics are worried about how much higher wages will hurt Wal-Mart's long-term earnings. The company can't catch break. This has kept Wal-Mart stock, which closed Friday at $79.24, under pressure. The shares are down about 7% year-to-date, lagging the broader averages and making it the fourth-worst performer among the Dow 30 stocks.

If you've bought and held WMT stock over the past year, you're up just 3%, against gains of 13% and 11% for the S&P 500  (SPX) and the Dow Jones Industrial Average  (DJI), respectively. Take a look at the chart.

 WMT 1 Year Price Returns (Daily) Chart

WMT 1 Year Price Returns (Daily) data by YCharts

But if you think Wal-Mart's growth struggles will continue beyond 2015, think again. The time to sell the shares has come and gone. The future appears much brighter than the past three years.

Wal-Mart has begun to make the kind of moves that suggest there's plenty of value in the stock. The company wouldn't have committed $1 billion in hiking hourly wages if it wasn't confident in its capital position. And the wage increase is certain to attract a higher-caliber of talent, which can improve both the services and culture of the brand. It worked for Costco  (COST), so why not Wal-Mart?

Tuesday's results, which analysts expect will be $1.04 a share earnings on $116 billion in revenue,  WMT stock --Tuesday's results, which analysts expect will be $1.04 a share earnings on $116 billion in revenue, mean little to WMT stock -- that's if you have a long-term view. that's if you have a long-term view. In that vein, discussing what analysts expect in one quarterly report is pointless. At around 16 times trailing earnings, these shares are cheap, trading five points below the S&P 500.

In the next 12 to 18 months, don't be surprised if WMT stock breaks above $90 per share, netting new all-time highs. Combined with its annual dividend yield of 2.47%, WMT stock is one you stash away and forget about.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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