The board of
Wal-Mart Stores, Inc.
) has authorized the repurchase of $15 million worth of shares.
This new buyback program will replace the previous $15 billion
program, which was announced in Jun 2011.
In the recently reported first-quarter 2014 results, announced
in May 2013, the retail giant repurchased 30 million shares worth
approximately $2.2 billion. Walmart now has approximately $712
million remaining under the 2011 share repurchase
The share buyback program helps the company reduce outstanding
share count, thereby increasing earnings per share and return on
equity. Apart from bolstering shareholder value, this strategic
move will also lift the relatively undervalued share price.
In addition to share repurchases, Walmart regularly increases
shareholder wealth in the form of dividends and has increased its
dividend every year since Mar 1974. During the first quarter, the
company paid $1.6 billion in dividends.
Most recently, in Feb 2013, Walmart announced a dividend hike
of 18% for fiscal 2014 to $1.88 per share over last year's
dividend of $1.59 per share. Prior to that, in Mar 2012, the
company's board hiked its annual dividend by 8.9% to $1.59 per
Returning shareholder value not only reflects Walmart's
ability to increase its free cash flow per share at an impressive
rate, but also its confidence in its fundamentals. Walmart has
returned nearly $100 billion to its shareholders through
dividends and buybacks during the last 10 years.
Overall, we are impressed with the company's initiatives to
reduce operating expenses. In addition, the company has strong
international presence and has been expanding its e-commerce
business. However, rising gas prices, delayed income tax refunds
and higher payroll taxes might hurt consumer spending going
ahead. Also, Walmart's actions and operations are often subject
to strict media scrutiny. Currency headwinds and continued
economic pressures also keep us on the sidelines. Currently,
Walmart has a Zacks Rank #3 (Hold).
Some other supermarket retailers in the industry worth a look
Ingles Markets, Inc
The Fresh Market Inc.
The Kroger Co.
). While Ingles holds a Zacks Rank #1 (Strong Buy), Fresh Market
and Kroger hold a Zacks Rank #2 (Buy).
INGLES MARKET A (IMKTA): Free Stock Analysis
KROGER CO (KR): Free Stock Analysis Report
FRESH MARKET (TFM): Free Stock Analysis
WAL-MART STORES (WMT): Free Stock Analysis
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