The Three Mistakes at Wal-Mart

I believe students of investing will be looking back in 2025 to think, “Wow, Wal-Mart was pretty cheap at $60 per share in 2015. It was a classic example of Peter Lynch’s ‘blue-chip with a solvable problem’ theory.” The earnings yield on the stock is 8%, and is almost 9% when you measure Wal-Mart using a constant currency metric. The dividend yield is 3.25%, and the dividend payment itself has increased every year for decades. Although this explains why it won’t take much for Wal-Mart to give shareholders satisfactory returns from this point forward, it is worth taking a moment to pause and examine how Wal-Mart got itself in this position in the first place.

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