Analysts at Deutsche Bank reiterated Sell rating on the shares of Wal-Mart Stores, Inc. (NYSE: WMT) with a price target of $50. They state that Wal-Mart has materially increased its promotional presence year-over-year over the past few months.
DB analysts state that Wal-Mart's U.S. comp of 1.3 percent in Q3 FY2011 was respectable, but they believe higher food inflation and increased SKU count across the store drove the entire comp, masking traffic softness. They add that utilizing Market Track data that surveys circular activity suggests that WMT's measured advertising increased 143 percent year-over-year in October following a 37 percent increase in August and September, on average. They state that the number of inserts per market during October rose from 1.2x to 2x on a weekly basis while page count increased to 16 per insert compared to 12 a year ago. Looking ahead, the benefit from these factors, coupled with its recently restored layaway program should help same stores sales trend continue into Q4. They add that the bigger question on their minds is what will be the impact to both inventory turns and gross profit margins from these initiatives going forward as they observed in the company's Q3 results.
On a year-to-date basis, Wal-Mart Stores has a share performance of 6.12 percent, and as compared to Standard & Poor's, it has an YTD share performance of 9.78 percent.
Wal-Mart Stores is the leading retail stores operator in various formats worldwide. The company's Wal-Mart U.S. segment offers meat, produce, deli, bakery, dairy, frozen foods, alcoholic and nonalcoholic beverages, and floral and dry grocery. It has a market capitalization of $196.57 billion with a P/E ratio of 12.08.
Shares of Wal-Mart gained 0.69 percent, or $0.39, to trade at $57.03.
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