Wal-Mart Shares — 3 Pros, 3 Cons
If the legendary retailer Sam Walton were alive today, he would certainly be stunned by the performance of the company he founded, Wal-Mart (NYSE: WMT ). Over the past 10 years, the annual average return has been a measly 1.7%.
But as the world’s largest retailer, should Wal-Mart be able to do better? It definitely has many benefits. It has the scale to extract great terms from vendors and its cash-flow generation is enormous. The dividend yield is also a decent 2.8%.
Should investors consider buying shares? Let’s take a look at the pros and cons:
Pros
New ideas. Wal-Mart is in the early stages of launching a small-store format concept called Wal-Mart Express.
No doubt, the company has reached a high degree of saturation in large markets. But with a small-store strategy, Wal-Mart can potentially find new growth opportunities. Besides, small stores have lower costs and higher returns on capital.
Global expansion. This is key to Wal-Mart’s growth strategy. To this end, the company has been aggressive with its acquisitions. For example, it has purchased a majority stake in Massmart, which is a top retailer in Africa. The continent represents a big opportunity and it looks like Wal-Mart will now have a strong foothold.
E-commerce. This market should continue to grow at a hefty rate for the long haul. To benefit from this trend, Wal-Mart has been investing more in its digital strategy. Consider that the company has an online system to allow customers to pick up items. There is also a move to provide for the delivery of groceries via an online system.
Cons
Traction. For the past two years, the same-store growth rate in the U.S. has been declining. It’s a scary statistic. Unless it is corrected, it will be extremely difficult for Wal-Mart’s stock to get traction again.
Competition. The discount category has been red hot. In other words, Wal-Mart now has to contend with many competitors. These include Family Dollar (NYSE: FDO ), Target (NYSE: TGT ) and Costco (Nasdaq: COST ). These companies have been successful in providing a wide assortment of products at fairly low prices.
Pros And Cons Of Walmart - News
Let's take a look at the pros and cons: New ideas. Wal-Mart is in the early stages of launching a small-store format concept called Wal-Mart Express. No doubt, the company has reached a high degree of saturation in large markets.
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Here's a look at the stock's pros and cons: Broad brands. General Mills has products across categories like cereals, soups, desserts and snacks. Some of the brands include Cheerios, Trix, Pillsbury, Betty Crocker and Nature Valley. For the most part,
There are pros and cons when it comes to ethnic skin. On the positive side, the photoprotective role of melanin makes darker skins more resistant to wrinkles. The main downside of having more melanin is its reactivity to inflammation, which can lead to
Given the pros and cons, we maintain our Neutral rating on the stock. Moreover, Best Buy, which faces competition from Wal-Mart Stores Inc. (WMT - Analyst Report), also holds a Zacks #3 Rank, which translates into a short-term 'Hold' rating,
Wal-Mart Shares -- 3 Pros, 3 Cons | InvestorPlace
If the legendary retailer Sam Walton were alive today, he would certainly be stunned by the performance of the company he founded, Wal-Mart (NYSE: WMT ). Over the past 10 years, the annual average return has been a measly 1.7%.
But as the world’s largest retailer, should Wal-Mart be able to do better? It definitely has many benefits. It has the scale to extract great terms from vendors and its cash-flow generation is enormous. The dividend yield is also a decent 2.8%.
Should investors consider buying shares? Let’s take a look at the pros and cons:
Pros
New ideas. Wal-Mart is in the early stages of launching a small-store format concept called Wal-Mart Express.
No doubt, the company has reached a high degree of saturation in large markets. But with a small-store strategy, Wal-Mart can potentially find new growth opportunities. Besides, small stores have lower costs and higher returns on capital.
Global expansion. This is key to Wal-Mart’s growth strategy. To this end, the company has been aggressive with its acquisitions. For example, it has purchased a majority stake in Massmart, which is a top retailer in Africa. The continent represents a big opportunity and it looks like Wal-Mart will now have a strong foothold.
E-commerce. This market should continue to grow at a hefty rate for the long haul. To benefit from this trend, Wal-Mart has been investing more in its digital strategy. Consider that the company has an online system to allow customers to pick up items. There is also a move to provide for the delivery of groceries via an online system.
Cons
Traction. For the past two years, the same-store growth rate in the U.S. has been declining. It’s a scary statistic. Unless it is corrected, it will be extremely difficult for Wal-Mart’s stock to get traction again.
Competition. The discount category has been red hot. In other words, Wal-Mart now has to contend with many competitors. These include Family Dollar (NYSE: FDO ), Target (NYSE: TGT ) and Costco (Nasdaq: COST ). These companies have been successful in providing a wide assortment of products at fairly low prices.
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: Wal-Mart Shares: 3 Pros, 3 Cons
Wal-Mart (WMT) is one of the greatest success stories ever, but should you buy the stock?
Wal-Mart Shares -- 3 Pros, 3 Cons | InvestorPlace
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