The Big Picture Issues With Wal-Mart Stock Right Now

I saw the recent news release that Wal-Mart is shaking up its top management positions in an effort to spur growth, with the latest strategy involving small neighborhood stores and more organic, healthy grocery items lining the front area of the store. With back-to-back dividend increases in the 2% range, people have been wondering what issues currently exist at Wal-Mart that are worthy of an investor’s examination. The deep issue is this: It is difficult for a company that generates $487 billion in annual sales to grow at a fast rate. Shareholder wealth creation largely consists of buybacks, dividends, and efficiencies at that point rather than robust top-line revenue growth.

My take on Wal-Mart’s problems are as follows:

One. The company achieved 10.5% annual earnings per share growth over the past ten years not because the company’s profits were growing at a furious rate but because the company was repurchasing … Read the rest of this article!