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Why Wal-Mart’s Market Cap Just Lost $20 Billion – Updated with Slidedeck

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Wal-Mart Stores, Inc. (NYSE:WMT)’s market cap has sank by $20 billion in morning trading today, falling from an early 1% gain to a loss of over 8.86% in a matter of minutes. The stock’s rollback (pun intended) occurred after the retailer’s CEO Doug McMillon reported that revenue would be flat for the company’s 2016 fiscal year, which ends on January 31, 2016. The decline today is shaping up to be the company’s worst in 15 years and has it trading at its lowest level in three years.

Walmart, WMT, retail

Wal-Mart Stores, Inc. (NYSE:WMT) has partially been affected by the strong U.S dollar, which has made the approximately one-third of its revenue that it generates outside of the U.S, less valuable. In another negative development, it reported that operating expenses would eclipse its sales growth for the fiscal year, which has not been aided by the much-publicized raising of its pay-floor, which will reportedly cost it $1.2 billion in fiscal year 2016. Furthermore, Wal-Mart’s earnings estimates for the 2017 fiscal year are projected to be 6%-to-12% lower on a year-over-year basis due to those wage hikes and its continued efforts to remain the low-price leader.

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The overly sluggish results will be a disappointment to some of the elite quant funds tracked by Insider Monkey, which had Wal-Mart Stores, Inc. (NYSE:WMT) ranked as one of their top picks collectively, not to mention the huge investments in the stock by billionaires Warren Buffett and Bill Gates. One of the noted positives for the stock was its strong dividend yield of 3%, which has only grown that much stronger in the wake of this morning’s drop.

Wal-Mart attempted to soften the guidance blow by announcing $20 billion in share repurchases, though it has thus far not had the desired effect. Shares are now down by more than 29% year-to-date, pushing its market cap down to $193.95 billion.

UPDATE: On the following pages you can find the slides from Executive Vice President and Chief Financial Officer Charles Holley’s presentation at the company’s 22nd annual investors’ meeting today, detailing the projected growth for Wal-Mart in the years to come.

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