In 2014, the S&P 500 Index has surged by 5.6%. During the same period, Wal-Mart (WMT) declined by 2.5%. This article discusses the reasons for the poor stock performance and analyzes if the company is a good buy at current levels.
Weak Results and Guidance…
For the first quarter of 2014, Wal-Mart reported diluted EPS of $1.10, a decrease of 3.5% as compared to the first quarter 2013 EPS of $1.14. Muted EPS for the first quarter of 2014 is the first reason for the relatively depressed stock price action for Wal-Mart.
In terms of guidance, Wal-Mart expects second quarter fiscal year 2015 diluted earnings per share from continuing operations to be between $1.15 and $1.25. In other words, the earnings for the second quarter of 2014 will be from flat to negative considering the fact that the EPS for the second quarter of 2013 was $1.24. Weak earnings guidance is the second reason for the current depression in the stock price.
— Guru Focus