This Retailer Has a Truly Amazing Story!
Robert is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
From its humble beginnings of a single location opened in 1962, to its current status as one of the world’s true juggernaut companies, Wal-Mart (NYSE: WMT) is an amazing American success story. The company sells virtually everything, and operates more than 10,000 retail stores in more than 25 countries. As an investment, there are few stocks that boast a similar track record of rewards for shareholders. The Walton family, which owns roughly 48% of the company, should be considered a modern American dynasty. At recent valuations, the net worth of the Walton family is more than $110 billion. Wal-Mart is an American business wonder with a massive size and scale of almost unbelievable proportion.
Out of this world numbers
In February, Wal-Mart released its fiscal fourth-quarter and full-year fiscal 2013 results. The company reported full-year total revenue of $469 billion, an increase of 5% versus the prior year. To put Wal-Mart’s gigantic sales in perspective, if Wal-Mart were its own nation it would rank among the top 30 countries by gross domestic product. Its $469 billion in sales would almost match the GDP of Poland, according to 2012 estimates from the International Monetary Fund. Furthermore, Wal-Mart employs more than 2 million people, only about a half million fewer than the population of Chicago.
Wal-Mart competes with other discount retailers including Target (NYSE: TGT) and Costco (NASDAQ: COST). Target is a $40 billion company that competes directly with Wal-Mart. In November, Target reported adjusted earnings per share of $0.90, up 4.3% from the third quarter 2011. Target also provided fourth quarter earnings guidance of $1.64-$1.74. Target generated trailing twelve-month revenue of almost $72 billion.
Costco is another successful discount retailer that competes with both Wal-Mart and Target. Costco has had solid growth in sales and earnings since the financial crisis, and even better share price performance. The stock has increased more than 70% since the beginning of 2010. Costco’s net sales and net income have grown 8% and 7.7%, respectively, over the last four years. Costco brought in more than $100 billion in sales over the past year.
Both Target and Costco are great businesses, but as you can see, their numbers pale in comparison to Wal-Mart’s. Not only does Wal-Mart do more sales than both of these companies, but you could add the total sales from Target, Costco, Sears, and Kroger, and still not equal Wal-Mart’s annual sales.
Wal-Mart’s Stellar Shareholder Friendliness
If all that weren’t enough, the company is one of the most shareholder-friendly stocks in existence. In 2012, the company paid returned $13 billion to shareholders in the form of dividends and share buybacks. Furthermore, in conjunction with the quarterly and full-year results, Wal-Mart announced it will increase its fiscal 2014 dividend by 18%. Wal-Mart has increased its dividend every year since the first declared dividend of $0.05 per share in March 1974. The dividend has doubled over the past five years.
Based on Wal-Mart’s fiscal 2013 results of $5.02 in earnings per share, the stock trades for slightly more than 14 times. In addition, the company expects fiscal 2014 profits to be in a range of $5.20 per share to $5.40 per share, meaning the stock trades at 13.5 times the midpoint of next year’s expected earnings. With a gigantic business, shareholder friendly management, and a modest valuation, if you’re considering investing in American business, Wal-Mart should be on your watch list.
Robert Ciura has no position in any stocks mentioned. The Motley Fool recommends Costco Wholesale. The Motley Fool owns shares of Costco Wholesale. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!