Wal-Mart returns to darling status on Wall Street

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Wall Street is back in love with Wal-Mart Stores in a big way.

The retailer’s shares so far today are up 75 cents to $54.89 -- and touched their highest since November 2004 -- after the company raised its estimate of first-quarter earnings to a range of 74 to 76 cents a share, from a previous range of 70 to 74 cents.

The shares are up nearly 16% year to date. This for a stock that had been stuck in neutral for the last three years, mostly trading between $42 and $51. The shares were down 11.4% in 2005, down 1.3% in 2006 and up just 2.9% last year.

Wal-Mart said its same-store sales rose 1.1% in March and were up 0.7% excluding its gasoline sales.

Those numbers may not look like much, but they’re far better than what many other retailers are reporting. Target said same-store sales slid 4.4% last month; J.C. Penney said its sales were off 12.3%.

An early Easter hurt retailers’ results in March, but the weakness in sales clearly reflects the troubled economy’s squeeze on consumers.

And in a squeeze, Americans are turning back to Wal-Mart for its low prices -- including on electronics such as flat-panel TVs. The company said its U.S. stores ‘continued to generate triple-digit comparable sales in flat-panel TVs . . . as well as double-digit growth rates in laptop computers, video games and digital cameras.’

Wall Street figures Wal-Mart will earn about $3.40 a share this year, up from $3.13 last year. If the $3.40 estimate is right on, the stock’s price-to-earnings ratio is about 16. That makes it more expensive than shares of many retailers, but it’s a far cry from the valuation investors gave Wal-Mart in the late 1990s.

Hard to believe, but Wal-Mart’s stock had a price-to-earnings ratio of nearly 60 at the end of 1999 -- the last gasp of the growth-stock mania of that decade.

Posted April 10, 2008