NEW YORK, May 17 (Reuters) - Investors might have underestimated Wal-Mart Stores Inc's prospects once economic recovery begins, but the retailer's management is buying the stock because it knows it is trading at a bargain, Barron's reported on Sunday.
Wal-Mart bought 19.2 million of its own shares in the latest quarter and has $4 billion left in its buyback plan, Barron's said.
The newspaper said in its May 18 edition that Wal-Mart has faith in itself at a time when few others do, noting that the stock is down 14 percent at $48.15 and has been trading essentially flat since March 9. This is happening even as the S&P retail index has climbed 41 percent on heavy volume, Barron's said.
Wal-Mart's earnings last week reflected weak overseas revenue and a strong dollar, even as U.S. sales rose, Barron's said, adding that new customers drove 17 percent of increased visits and spent 40 percent more than regular customers.
Barron's also said a second quarter swelled with people spending money that they received in rebate checks will set up tough comparisons later.
That helps explain why Wal-Mart's shares are retreating to trade at 13.4 times forward earnings even as free cash flow and book value reach their highest levels in at least a decade, Barron's said.
(Reporting by Robert MacMillan, Editing by Maureen Bavdek)
((robert.macmillan@thomsonreuters.com; +1 646 223 6012; Reuters Messaging: robert.macmillan.reuters.com@reuters.net)) Keywords: WALMART/ (Click on http://blogs.reuters.com/category/themes/mediafile/ to see Reuters MediaFile blog) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Wal-Mart bought 19.2 million of its own shares in the latest quarter and has $4 billion left in its buyback plan, Barron's said.
The newspaper said in its May 18 edition that Wal-Mart has faith in itself at a time when few others do, noting that the stock is down 14 percent at $48.15 and has been trading essentially flat since March 9. This is happening even as the S&P retail index has climbed 41 percent on heavy volume, Barron's said.
Wal-Mart's earnings last week reflected weak overseas revenue and a strong dollar, even as U.S. sales rose, Barron's said, adding that new customers drove 17 percent of increased visits and spent 40 percent more than regular customers.
Barron's also said a second quarter swelled with people spending money that they received in rebate checks will set up tough comparisons later.
That helps explain why Wal-Mart's shares are retreating to trade at 13.4 times forward earnings even as free cash flow and book value reach their highest levels in at least a decade, Barron's said.
(Reporting by Robert MacMillan, Editing by Maureen Bavdek)
((robert.macmillan@thomsonreuters.com; +1 646 223 6012; Reuters Messaging: robert.macmillan.reuters.com@reuters.net)) Keywords: WALMART/ (Click on http://blogs.reuters.com/category/themes/mediafile/ to see Reuters MediaFile blog) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.