WalMart (WMT) 2012 Review

Wal-Mart Stores is the world’s largest retailer operating 629 discount stores,  over 3,000 super centers, 611 Sam’s Clubs, 210 Neighborhood Markets in the US and 5,651 foreign stores in Latin America, Canada, Europe and Asia.  The company has grown profits and dividends at a 12-16% annualized pace over the last 10 years earning a 20% return on equity.  The company should continue to turn in above average results as a result of :

(1) improvement in productivity resulting from expanding international markets, in particular China where it is growing at a 30% annual rate,

(2) a positive impact on costs given management’s ability to ‘buy for less’,

(3) growing on line business.

Negatives:

(1) difficulty in entering the Indian market,

(2) the potential for price inflation in consumer goods,

(3) its exposure to foreign laws and regulations as well as currency fluctuations.

WMT is rated A++ by Value Line, carries a 38% debt to equity ratio and its stock yields 2.2%.

Statistical Summary

                 Stock      Dividend         Payout      # Increases   

                Yield      Growth Rate     Ratio       Since 2002

WMT         2.2%           10%             32%             10

Ind Ave       1.5              9                 25                NA 

                Debt/                      EPS Down       Net        Value Line

               Equity         ROE      Since 2002      Margin       Rating

WMT       38%            21%            0                  4%            A++

Ind Ave    44                18             NA                3               NA

   Chart

            Note: WMT stock made slow initial progress off its March 2009 low.  It quickly surpassed the downtrend off its September 2008 high (straight red line); however, it took almost three years to overcome the November 2008 high (green line).  Long term the stock is in an uptrend (blue lines).  Intermediate term, it is in an uptrend (purple lines).  Short term it is on a moon shot (brown line).  The wiggly red line is the 50 days moving average.  The Dividend Growth Portfolio does not own WMT, having Sold it (and reinvested the funds in Target) back in 2008 when WMT traded into its Sell Half Range.  The upper boundary of its Buy Value Range is $42; the lower boundary of its Sell Half Range is $61.

http://finance.yahoo.com/q?s=WMT

10/12