Earnings Preview for Wal-Mart (WMT, MSM, CA)

Wal-Mart WMT is expected to announce its Q1 earnings results on Tuesday, May 17. Analysts expect earnings per share to reach $0.95, or an increase of 9.2% on the same quarter last year. Revenues are projected to stand at $103.02 billion, or 3.2% higher than in the same quarter a year ago. Wal-Mart Stores operates retail stores. The company operates in three business segments: Wal-Mart U.S., International and Sam's Club. Looking ahead, Wal-Mart's Q2 earnings per share is expected to reach $1.08, up 11.3% year-over-year. In the whole year, analysts expect Wal-Mart to post earnings per share of $4.44, or 9.1% higher than a year ago. In the upcoming quarter, revenues should reach $107.69 billion, or an increase of 3.8% on the same quarter last year. For the year as a whole, revenues are projected to stand at $439.83 billion, or 4.3% higher than a year ago. Most analysts expect Wal-Mart to post a decline in same-store sales for the eight quarter in a row. As a result, investors will be anxious to know more about the results of Wal-Mart's new strategy, which is focused on small stores in inner cities and rural areas. This strategy will allow Wal-Mart to reach customers that do not reside near one of its trademark megastores. Investors will be closely monitoring Wal-Mart's overseas expansion as well, especially after the retail giant ran into a couple of obstacles in its attempted acquisition of South Africa's Massmart (MSM). Wal-Mart is willing to pay $2.4 billion for a 51% stake in its South African rival. The government and unions fear Wal-Mart might use its global supply networks to flood South Africa with cheap imports from Asia. Wal-Mart has accepted government requests not to cut staff and is willing to invest 100 million rand developing local suppliers. Wal-Mart is not, however, prepared to accept any supplier targets, which would limit its ability to import products at its own will. As a result, Wal-Mart has threatened the South African government it will back off from the deal if the government does not change its position on supplier targets. Wal-Mart is also planning to make its presence feel in the fast growing Chinese retail market. In the next 60 days, the company expects to complete an acquisition of a minority stake in China's e-commerce company Yihaodian. Wal-Mart operates in China since 1996, but this acquisition will strengthen its position in online retailing. Investors will also keep an eye on Carrefour (CA); world's second largest retailer by sales behind Wal-Mart. Carrefour has launched its restructuring plan, which includes offloading assets to boost its own valuation. As a part of this program, Carrefour is letting Dia float on the Madrid stock exchange. Dia is world's third largest hard discount group behind Germany's Aldi and Lidl. Rating agencies are mostly optimistic on Wal-Mart's long term outlook. The majority of rating agencies, 16 of them, have a Buy or Strong Buy rating. In today's trading, Wal-Mart added 0.75% to its value and is currently trading at $56.14. In the last 30 days, Wal-Mart's shares gained 4.84%.