Tuesday, February 16, 2010

Wal-Mart Stores Inc. (NYSE: WMT): Q4 Earnings Preview 2010

Wal-Mart Stores Inc. (NYSE: WMT), the world's largest retailer, is scheduled to release its fiscal fourth-quarter 2010 financial results before the opening bell on Thursday, February 18, 2010. Analysts, on average, expect the company to report earnings of $1.12 a share on revenue of $114.51 billion. In the year ago period, the company posted earnings of $1.03 per share on revenue of $109.12 billion.

Wal-Mart Stores, Inc. serves customers and club members more than 200 million times per week at more than 8,000 retail units under 53 different banners in 15 countries. The Company operates in three business segments: Walmart U.S. and Sam’s Club in the United States, and Walmart International in 14 countries and Puerto Rico. In January 2009, the Company acquired 57% of D&S S.A.

In the preceding third quarter, the company reported that its net income rose to $3.239 billion from $3.138 billion reported in the prior-year period. Net income per share attributable to the company grew to $0.84 from $0.80. Revenue increased to $99.411 billion from $98.345 billion. Analysts, on average, expected the company to earn $0.81 per share on revenue of $99.88 billion for the quarter.

For the fourth quarter, the company anticipated earnings per share from continuing operations to be between $1.08 and $1.12.

In November, the company also revised its fiscal 2010 earnings per share from continuing operations outlook to $3.57 to $3.61 from $3.50 to $3.60. Walmart U.S. expects comparable store sales during the 13-week period from October 31, 2009 through January 29, 2010 to be flat, plus or minus one percent - as compared to the 2.4% comp for the same period last year. Sam's Club expects comparable club sales during the fourth quarter to be nearly flat, plus or minus one percent.

In January, the retail giant announced its plans to cut about 11,200 jobs at its Sam's Club membership warehouse stores in the U.S. Earlier in January, Wal-Mart decided to close ten "financially underperforming" Sam's Club locations in the U.S. and lay off about 1,500 workers. The company said that the decision to close the stores was made after reviewing the company's current business performance and as the stores continued to lose money.

Wal-Mart is poised to benefit from a rebound in consumer spending, improvement in the job market and economic stabilization. According to the National Retail Federation, U.S. total holiday sales in November and December rose 1.1 percent industrywide, while it had forecast a 1 percent drop. In January, retail sales increased by 0.5% month-over-month.

The company's stock currently trades at a forward P/E (fye 31-Jan-11) of 13.32 and PEG Ratio (5 yr expected) of 1.24. In terms of stock performance, Wal-Mart shares have gained 10 percent over the past year.

Full Disclosure: None.
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