Wal-Mart Optimistic on Economy as others slash outlooks

The clout and reputation of Wal-Mart (WMT) precedes it even in the most trying consumer and economic times. Not only is WMT the only component of the Dow to be in positive territory for the year it is one of those American bedrock companies that span the nation and its shopping consciousness.

With Wal-Mart reporting an almost 10% rise in year over year profit for the quarter it is becoming crystal clear that even a tight-wallet shopper needs the inexpensive wares provided by his or hers neighbourhood Sam's mega-store. Now not totally economy-proof, Wal-Mart was forced to make some forecasting concessions itself, however nothing in the drastic realm of Electronics retailer Best-Buy (BBY) from just a day ago.

Wal-Mart for the quarter earned $0.80/share ($0.77/share excluding items) compared to analyst expectations of $0.76/share. In the upcoming quarter Wal-Mart forecasts called for profit from $1.03-$1.07 per share, which came slightly below analysts average estimates of $1.11. However CEO Lee Scott's recorded comments of being "optimistic for the holidays" leads Investors to believe that the company banks on its pricing power and essential shopping wares as a way to flatten out the economic downturn.

Of course it is true that people will still have to buy all sorts of things! The positive for Wal-Mart is that it sells just about everything. As Best-Buy's economic comments put a damper on the future of electronic consumer spending, citing a "seismic" downturn of the consumer, no such epic troubles seem ahead for Wal-Mart stores across the country and abroad. Granted in trying times, shoppers on a whole may stall big-ticket item purchases but Wal-Mart's base of essential needs products and cost-effective middle-wares will likely attract shoppers who scale back from more boutique retailers.

While Wal-Mart may seem like one of those boring stocks, in this type of market boring is productive. A dividend yield of about 2% is sombering as other attractive companies being taken down by the stock market sell-off sit at yields in excess of 5-6%. The fact remains that Wal-Mart has been steady all year and will likely continue to be steady in the year to come.

View the full WMT chart at Wikinvest

Call it boring all you want, but in the down-turns its the tortoise that continues on less scathed.

Disclosure: Author is long BBY, holds no position in WMT

Economy Problems, What Problems? Wal-Mart's Solid Earnings

On a trading day spurred by earnings reports and a spike in Energy prices, Wal-Mart (WMT) took center stage yet again. Wal-Mart reported earnings, and the numbers were well received on Wall Street. Even if US sales growth was only about 6% the rest of Wal-Mart's International Empire gave Investors plenty to smile about and bid up.

The results, an overall increase in profit of 4% and sales of 8%, not headline grabbing by themselves, but with as vast a global footprint as Wal-Mart, impressive nonetheless. The increasing International focus was crucial, making up 25% of income. The giant retailer produced income of $1.02/share, which was inline with analyst estimates even if top line revenue came in slightly below ($106.27Billion v $106.9Billion). Although company executives were less than enthralled at the economic proposition for consumers in the US, providing profit guidance for 2008 within the range of analysts certainly put some of the worst fears at ease.

Net sales in its International operations were the key drivers of growth with an 18% spike in sales. The highlight of these International successes came from its British grocer Asda. Asda exceeded virtually all forecasts for 2007 and showed the strong diversity, especially abroad of the Wal-Mart ever-extending reach. Seems like no matter what the economic picture is, low prices will attract consumers. Wal-Mart seems to be getting back to this core motto, which is something seen very favourably by Investors.

For the year, the US operations still weigh heavily on the bottom line as US sales in 2007 accounted for $240Billion while International sales were only $90Billion. However the shift in focus and growth will be on the International stage and Wal-Mart is too big of a player to let itself be handcuffed by weakening economic metrics at home.

Say what you will about boring old Wal-Mart as a stock, but it has held up and is relatively at the same point it was a year ago, while still paying out 22 cents a quarter. It isn't too bad, but the yield at under 2% certainly has room to grow. Yes it is a Market Place Behemoth, a retailer with a 200Billion market cap, but if there's something safe to own, with great International potential upside, Wal-Mart would be a safe bet.

Disclosure: Author does not own WMT