How Wal-Mart Plans to Get Back to Business
On Thursday, Wal-Mart will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever surprises inevitably arise. That way, you'll be less likely to have an uninformed, knee-jerk reaction that turns out to be exactly the wrong move.
The scope of Wal-Mart's retail operations is difficult to fathom. As the largest private employer in the world, Wal-Mart has been in the Dow Jones Industrials since it replaced former retail kingpin Woolworth in 1997. More recently, though, Wal-Mart has had to try harder to keep its revenue rising. Let's take an early look at what's been happening with Wal-Mart over the past quarter and what we're likely to see in its quarterly report.
Stats on Wal-Mart
Analyst EPS Estimate
Change From Year-Ago EPS
Change From Year-Ago Revenue
Earnings Beats in Past 4 Quarters
Source: Yahoo! Finance.
How can Wal-Mart keep growing this quarter?
Analysts haven't been entirely convinced of Wal-Mart's earnings prospects in recent months, having cut their views on the just-ended quarter by $0.04 per share and made further cuts to full-year consensus figures for both fiscal 2014 and fiscal 2015. The stock, though, has reflected investor optimism, with shares rising more than 11% since early February.
Wal-Mart is the undisputed leader in traditional retail, with revenue that dwarfs the gross domestic products of all but the largest countries in the world. The value of the Wal-Mart brand exceeds that of its nearest competitor by more than five times, and the company's wholesal-club subsidiary Sam's Club makes the top 10 all by itself.
But Wal-Mart has sought to move beyond retail dominance to tap other markets. Even after the company partnered with American Express to come out with a low-fee prepaid debit card, Wal-Mart made news earlier this month when its ambitions to get its own banking charter were thwarted by the Federal Reserve's Federal Advisory Council. With a loyal customer base that includes many people who lack basic banking services, Wal-Mart would be a natural powerhouse in financial services right out of the gate.
In addition, Wal-Mart is working to revamp its image. As many believe the retailer's success represents the downfall of locally based businesses and the decline of the labor movement, Wal-Mart aims to show the opportunities it offers to both its workers and its shoppers.
In Wal-Mart's quarterly report, watch for signs about whether the company's purported slow start to February ends up panning out. Anything other than a major jump in same-store sales will only perpetuate concerns that Wal-Mart hasn't solved its longer-term growth problems.
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The article How Wal-Mart Plans to Get Back to Business originally appeared on Fool.com.Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends American Express. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.