Market Overview

Walmart Competes In Sustainability

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Wal-Mart Stores (NYSE: WMT) is a great stock for consumer defensive investors. Wal-Mart intends to save $150 million investment in benefits towards its sustainability strategy initiatives in solar and wind energy projects, fuel cell installations, and its zero waste program FY 2013. Wal-Mart has achieved competitive advantage by adopting cost leadership strategy and providing consumer goods at lower prices. The company is able to beat large retail competitors such as Target Corporation and Kroger Corporation by reducing prices and thus achieving sustainable competitive advantage to a great extent.  Shares reached a 52-week high of $78.46 on Apr 9, 2013..

The retailer’s U.S. same-store sales rose just 1 percent in the fourth quarter. The delay in income tax refunds has affected their business. Wal-Mart has cashed approximately $3 billion in tax return checks at its U.S. stores so far this year. Wal-Mart’ stock earned $5.61 billion, or $1.67 per share, from continuing operations in the fiscal fourth quarter, up from $5.19 billion, or $1.51 per share a year earlier. Wal-Mart’s FY 2012 sales were of approximately $444 billion.

52 Week High /Low: $ 77.60 / $ 57.18

Market cap 251,509,748,729

P/E Ratio: 15.22

Forward P/E(1y) 14.27

Earnings Per Share (EPS) $ 5.02

Annualized dividend $ 1.88

Ex Dividend Date Mar. 8, 2013

Dividend Payment Date Apr. 1, 2013

Current Yield 2.47 %

Healthier Foods

According to Wal-Mart’s 2012 Global Responsibility Report, Wal-Mart is on a five year plan to reformulate thousands of everyday packaged food items by the end of 2015. The company saved customers nearly $1.1 billion in 2011 and strives to make healthier food choices affordable by reducing price premium on more than 350 of its better-for-you items Wal-Mart plans to open 275 to 300 stores in areas serving food deserts through 2016. Wal-Mart and the Walmart Foundation have provided more than $13 million in grants to nutrition education programs.

Energy Reduction

The retailer is also working to reduce energy use and greenhouse gas emissions with long term objectives to be supplied by 100 percent renewable energy. In fiscal years 2009 and 2010, Wal-Mart experienced respective USD $2.3 billion and USD $9.8 billion unfavorable currency exchange rate impacts. Wal-Mart then experienced $4.5 billion favorable currency exchange rate impacts which improved its rate of efficiency per unit of net sales.

Competition

Balancing sustainability with profitability for investors is crucial to the success of a company.  It is crucial to remain profitable in these areas. Managing sustainability standards, goals and partnerships for a company has also its challenges and risks associated with sustainability as concern.

Target Corporation (NYSE: TGT) is not as advanced in sustainability. The company has made improvements but is still perceived about lagging behind other companies. This is because Target lacks focus in its objectives. Walmart subjectively is better in company standards on business sustainability when compared to Target. Target appears to invest more in employees initiatives and education. Walmart is focused on environment, present and future.

Target traded up 0.48% on Thursday, hitting $69.18. Target has a 52-week low of $54.68 and a 52-week high of $69.84. The stock’s 50-day moving average is currently $66.28. The company has a market cap of $44.371 billion and a price-to-earnings ratio of 15.23.

The Kroger Co. (NYSE: KR) lacks focus of a sustainable competitive advantage. Wal-Mart maintains a sustainable competitive advantage because of its very efficient and low-cost distribution system. Kroger's strength is based on partnerships, acquisitions and price. The company has adopted strategies such as eco-consumer packaging for consumers. These products also provide them business value in terms of enhanced efficiency and transparency of commodity chains, more stabilized resource inputs, increased consumer trust, and ultimately increased sales.

Kroger ($30.44, +$1.08, +3.68%) had fourth-quarter profit and recorded solid revenue growth. The company also benefit from an accounting related credit, an extra week in the quarter, and the absence of a large pension related charge versus the year earlier.

Investors are vital to Wal-Mart’s success to go green

Investors should be on the lookout for Wal-Mart’s stock resiliency and profit increase in the coming weeks first-quarter earnings reports. Compared to its rivals, Wal-Mart has more advantages of low-cost sourcing, highly, advanced IT capabilities, and customer-centricity. The consumer staples sector has been strong this year. Wal-Mart had forecast a profit of $1.53 to $1.58 per share from continuing operations, and analysts expected it to earn $1.57 per share, according to Thomson Reuters I/B/E/S. Revenue rose 3.9 percent to $127.92 billion. Wal-Mart earned $5.02 per share in fiscal 2013. Economic factors could benefit the world’s largest retailer long term. Wal-Mart is a “win.”

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Markets

 

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