Retail behemoth Wal-Mart (NYSE:WMT) reported another quarter of modest domestic growth and strong international expansion in 2011. The bright spot was Sam's Club, though it has a minimal impact on total firm profitability. Over the long haul, Wal-Mart represents one of the safest bets in retail and has appeal to conservative, income-minded investors. (For more on retail stocks, check out Analyzing Retail Stocks.)

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First Quarter Recap
Total net sales improved 4.4% to $104.2 billion in 2011 as retail sales also grew 4.4% and membership income related to the Sam's Club warehouse chain jumped 8.4%, but accounted for less than 1% of the top line. U.S. namesake store sales made up 60.6% of retail sales and grew a very modest 0.6% as new store openings offset a 1.1% decline in same-store sales. International sales continued to be robust and rose 11.5% to account for 27% of sales. Sam's Club sales accounted for the remaining 12.4% of the top line increased a very healthy 9.4% as comparable sales rose 4.2%. Sam's Club performance has improved and it is better competing with rivals that include market leader Costco (Nasdaq:COST) as well as BJ's Wholesale Club (NYSE:BJ) in the eastern U.S. and PriceSmart (Nasdaq:PSMT) in the western U.S.

Divisional operating income increased 1.2% and reached $6.2 billion. The U.S. namesake stores continued to account for the bulk of profits at 75% and grew a modest 0.8%. International rose a slightly stronger 1.2% to account for 17.7% of profits, with Sam's Club seeing a strong 7% improvement to account for just over 7% of the total.

Backing out corporate overhead, company operating profits increased 2.1% to $5.4 billion. Lower income taxes helped send net income up 3.8% to $3.4 billion and share buybacks helped push per share earnings up by 11.5% to 97 cents per diluted share. (For more on the effect earning has, read Earnings Power Drives Stocks.)

The company provided second quarter 2011 profit guidance and currently expects earnings between $1.05 and $1.10 per diluted share. For the full year, analysts project total sales growth north of 4% and total sales of almost $440 billion. The current consensus analyst earnings projection is $4.44 per share.

Wal-mart generated $2 billion in operating cash flow but spent $2.4 billion on capital expenditure, $2.1 billion repurchasing its own shares and $1.3 billion to pay dividends. the company had to issue debt to cover the capital outlays not generated by its operations. This is unlikely to be a recurring situation as its business is somewhat seasonal and it generates more sales and profits during the holiday season, but is something for investors to keep an eye on.

Bottom Line
Overall, Wal-Mart continues to trade at a reasonable forward earnings multiple of less than 13. It should continue to leverage single digit sales growth into low double digit earnings growth, meaning investors should see a similar level of share price gains given stocks follow the fundamentals of a firm's underlying operations over the long term. Throw in a current dividend yield of about 2.6% to boost investor total returns to the mid-teens over time. The company, like off-price apparel and home furnishing rival TJX Companies (NYSE:TJX) is also somewhat recession resistant and can help protect portfolios from the next economic downturn. (For more assistance in investing in retailers, see The 4 R's Of Investing In Retail.)

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