Wal-Mart Stores, Inc. (NYSE:WMT) has forever been a market leader, and a great company to have your money in. As an investor, I’m going to dig deeper and try to get an understanding of the inner workings of the company, and its Strengths, Weaknesses, Opportunties, and Threats, or what is commonly known as a SWOT analysis.
A 2.3% dividend yield puts the stock well ahead on the yield curve than a 10-year treasury. The company raised its dividend by18% not long ago.
For the most recent quarter, and I quote: “gross margin was 24.9%, 10 basis points better than the prior-year quarter. Operating margin was 6.7%, 10 basis points worse than the prior-year quarter. Net margin was 4.4%, 20 basis points better than the prior-year quarter.” …. The fact that operating margins were worse is not necessarily a positive indication about the efficiency with which the company was run, but that is just one possible explanation, and it’s not a large dip. As the other numbers are better, I’m inclined to give this a pass.
Wal-Mart Stores, Inc. (NYSE:WMT) has one of the best track records on the market as a stock, being one of the best equities of all time. It has underperformed the S+P 500 over the last 10 years, but it has performed well the last year.
One huge strength Wal-Mart has is that it owns much of the property its stores lie on. Many of these properties were purchased years ago, and are not marked up on the balance sheet to necessarily reflect their current value.
Warren Buffett of Berkshire Hathaway Inc. (NYSE:BRK.B) is a big investor. This should at least somewhat ease concerns from retail investors about the long-run viability of the company. Berkshre doesn’t make many losing investments.
Although Amazon.com, Inc. (NASDAQ:AMZN) is working to make same-day delivery an option, it isn’t there yet. At Walmart.com, you can pick out what you want to buy online, go to your local Wal-Mart Stores, Inc. (NYSE:WMT), and pay for it in cash. This helps keep those without credit cards shopping at the retail behometh, even online. That’s a definite advantage over Amazon.
Over the years, Wal-Mart has created one of the most efficient distribution networks in retail, which helps enable it to be the “low cost leader.”
Wal-Mart enjoys tremendous negotiating leverage over companies it does business with, due to its mammoth size and volume.
Walmart’s online site does not offer the same selection as many stores.
According to this Motley Fool column, “The company expects to earn $1.11 to $1.16 per share, which is up only slightly from a year ago and below the $1.18 in earnings per share analysts are currently expecting.” This correlates to weak February sales described below. Earnings are to be reported May 16th.