You'll be hard-pressed to find a stock more hated than Wal-Mart (NYSE:WMT) these days. Between lawsuits and Congressional investigations into its hunt for a banking license, gasoline price-sapped comparable sales, and a declining stock price even in the month of St. Valentine, Wal-Mart gets little love from Mr. Market.

But Wal-Mart's no wallflower. Loved or not, it's going to report its Q4 and full-year 2005 earnings numbers before the market reopens on Tuesday morning.

Wall Street Wisdom:

  • General consensus. 28 analysts track Wal-Mart, and for all that its stock price is sagging, most of them love it. The stock garners 16 buy ratings and 12 holds, but not a single sell.
  • Revenues. Sales are expected to rise 10% year over year. Same as last quarter. Same as the quarter before that. You can set your watch to this company's sales growth.
  • Earnings. For the first time in a while, analysts expect Wal-Mart to grow profits faster than it grows sales. They're predicted to rise nearly 11% year over year to $0.83 per share.

Margin watch:
After reviewing the chart below, I really don't see what all the fuss is about. Wal-Mart's gross, operating, and net margins have all held up quite well over the past 18 months. Sure, same-store sales growth isn't as strong as you'd like to see from a "growth company," but how silly is it to expect a $200 billion retailing behemoth to behave that way?

Margins %

7/04

10/04

1/05

4/05

7/05

10/05

Gross

22.6

22.8

22.9

23.0

23.1

23.0

Op.

6.0

6.0

6.0

6.0

5.9

5.9

Net

3.5

3.5

3.6

3.6

3.6

3.5
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

Foolish forensics:
Same-store or no same-store, Wal-Mart's sales have been rising strongly. In each of the past two quarters, Wal-Mart grew its total sales by 10%. Not too shabby for a growth company, and pretty darn impressive for a mature one.

Granted, net profits grew at only half that rate. The reason: Wal-Mart increased its long-term debt by more than 10% in each of those quarters, causing interest expenditures to rise at three times the rate of sales growth.

Despite the greater debt, though, the company's interest coverage ratio (net income divided by interest expense) remained high (6.8 and 9.3 in the past two quarters). In other words, while profits may not be growing as fast as we'd like to see, there's little risk that Wal-Mart won't be able to pay its bankers.

Fool contributor Rich Smith does not own shares of Wal-Mart.