Wal-Mart Stores' First Quarter Earnings Report

By Investopedia Staff | June 11, 2012 AAA

Wal-Mart Stores (NYSE:WMT) announced its results for the most recent quarter on May 17, 2012. Wal-Mart Stores operates Walmart discount stores, supercenters, Neighborhood Markets and Sam's Club locations in the United States.

Earnings play an important role in measuring the appropriate valuation for a stock. Investors should be cautious if the company's stock price is high but it consistently has low earnings. SEE: Surprising Earnings Results

The Numbers: Wal-Mart Stores' latest numbers were good, as the company announced EPS and revenues that came in ahead predictions. The company reported $1.09/share versus the $1.04 per share estimate and revenues of $112.27 billion versus the $110.5 billion estimate. EPS rose 12.4% while revenue climbed 8.6% from the same period last year. Net income for the first quarter was up 10.1% to $3.74 billion. Last quarter's profit boost ends a two-quarter streak of year-over-year profit decreases.

Management Quote: "Our strategy is clear. Our merchants are focused on increasing sales through the right assortment at the right time and for the lowest price," said Bill Simon, Walmart U.S. president and chief executive officer. "We will continue to invest in price to lower costs for our customers by enhancing leverage initiatives and managing expenses."

A Look Back: The company has now been profitable for the last five quarters, and over that span, profit has risen year-over-year by an average of 0.1%. The company saw its greatest boost in the most recent quarter quarter, when there was a 10.1% increase.

Looking Ahead: Analysts appear increasingly negative about the company's results for the next quarter. The average estimate for the second quarter has moved down from $1.18 a share to $1.16 over the last 90 days. Decreasing earnings estimates is generally a negative sign as it suggests analyst believe future earnings to be weaker than previously anticipated. At $4.85 per share, the average estimate for the fiscal year has fallen from $4.90 90 days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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