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 (AMZN) charges 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.
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.