Wal-Mart Stores, Inc. Earnings: Can the Retail Giant Keep Growing?

The massive retail company is fighting with economic trends and its own size. Will it prevail?

May 14, 2014 at 1:40PM

On Thursday, Wal-Mart (NYSE:WMT) will release its quarterly report, and investors have been worried about how well the retail giant can compete against competition on multiple fronts. At the same time that Target (NYSE:TGT) and other big-box retailers are honing their focus in order to draw business away from Wal-Mart, Amazon.com (NASDAQ:AMZN) and other online-centered retail operations are taking advantage of the convenience of Internet shopping, forcing Wal-Mart to beef up its own e-commerce presence in order to sustain its growth.

Wal-Mart has come from nowhere a half-century ago to become the biggest retail operation in the nation, with millions of employees relying on Wal-Mart for their livelihood and a huge group of suppliers who count on its business as a major part of their overall revenue. But lately, Wal-Mart has had difficulty growing, as competition gets smarter about marketing to the middle-class demographic that Wal-Mart has always done a good job targeting. 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 report.


Stats on Wal-Mart

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$116.28 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Wal-Mart earnings ever accelerate their growth?
Investors have gotten much more nervous about Wal-Mart earnings in recent months, cutting their April-quarter estimates by almost a dime per share and cutting full-year projections for both this fiscal year and next by about 5%. The stock has done reasonably well, though, rising almost 9% since early February.

Wal-Mart's fiscal fourth-quarter results show the difficulty that the company has had in producing growth. The retailer said that quarter earnings fell by 21%, with same-store sales falling 0.4% in the U.S. market. Even worse, Wal-Mart said that it expects revenue growth to be closer to 3%-4% for the full 2014 year. Smaller stores have performed well, as Wal-Mart seeks to compete against Target and Amazon.com by opening more of its neighborhood locations to capture more business.

Wmt International

Source: Wal-Mart.

But another key reason that Wal-Mart isn't getting the growth it needs is that it isn't taking full advantage of emerging markets. Shoppers' attitudes in places like Brazil and China are much different than they are in the U.S., and in particular, consumers aren't used to the concept of doing all their shopping in one location rather than going to multiple stores in order to get the best prices. That has forced Wal-Mart to reconsider its growth trajectory in those countries, and given their superior growth compared to the well-saturated U.S. market, missing out on the full emerging-market opportunity has been costly for Wal-Mart.

Still, Wal-Mart has been working hard to find new areas to raise revenue and profits. With its recent plans to carry Wild Oats organic products, Wal-Mart is tapping into a lucrative niche that has helped give specialty grocers huge margin advantages over traditional food sellers and could give customers a reason to shop there versus Target or Amazon. Wal-Mart's typical discounting practices won't give it the full benefit of those higher margins, but by staying true to its lower-price philosophy, it could encourage some of its shoppers to move up to higher-priced organic and natural foods as well as bring new customers in the door.

In addition, Wal-Mart wants to boost its presence in financial services, and it recently ramped up its offerings of money-transfer services in order to do that. By charging less than its current money-transfer partner, Wal-Mart adds to its existing lineup that already includes the BlueBird prepaid card and other useful financial products for those without traditional banking relationships. Wal-Mart hopes that by giving people more excuses to come into stores, it will sell more goods as well.

In the Wal-Mart earnings report, watch to see whether the company is able to make positive progress on the international front. Domestically, competitive pressures will continue to exist, but Wal-Mart's true potential lies in making itself a world power in retail.

Warren Buffett just bought nearly 9 million shares of this company
Imagine a company that rents a very specific and valuable piece of machinery for $41,000 per hour (that's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report reveals the company we're calling "OPEC's Worst Nightmare." Just click HERE to uncover the name of this industry-leading stock and join Buffett in his quest for a veritable LANDSLIDE of profits!

Click here to add Wal-Mart to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information