Shares of Wal-Mart Stores (NYSE:WMT) have risen 24.1% since May 15, 2012 to close at $73.68 on August 10, 2012. The company is looking to keep that trend going when it releases its second quarter results on Thursday, August 16, 2012.
A business' earnings are the main determinant of its share price because earnings and the circumstances relating to them can indicate whether the business will be profitable and successful in the long run. SEE: Surprising Earnings Results
What to Expect: Analysts are expecting Wal-Mart to report earnings of $1.17 per share, up 7.3% from a year ago, when the company reported earnings of $1.09 per share.
The consensus estimate has risen from $1.16 three months ago but is unchanged from 30 days ago. For the fiscal year, analysts are expecting earnings of $4.91 per share.
Wal-Mart is expected to report revenue of $115.56 billion for the quarter, beating last year's figure of $109.37 billion by 5.7%. Revenue of $474.8 billion is expected for the fiscal year.
Company Performance: Revenue for Wal-Mart has been on the rise for four consecutive quarters. It rose 8.5% in the first quarter, 5.9% in the fourth quarter of the last fiscal year, 8.1% in the third quarter of the last fiscal year and 5.4% in the second quarter of the last fiscal year.
Compared to the industry average of 14.16, WMT's P/E ratio of 16.0 is quite high. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Understanding The P/E Ratio
The biggest recent change for Wal-Mart's stock price came on June 8, 2012, when it rose $2.35 per share to $68.22.
The Competition: Wal-Mart Stores operates Walmart discount stores, supercenters, Neighborhood Markets and Sam's Club locations in the United States. The company's closest competitor in the retail (department and discount) industry, Dollar Tree (DLTR), will report earnings on August 16, 2012. Analysts are expecting earnings of 47 cents per share for Dollar Tree, up 23.7% from last year's earnings of 38 cents per share. Analysts are less optimistic about Wal-Mart than about Dollar Tree. Twelve out of 19 analysts rate the latter a buy compared to 11 of 23 for the former.