BENTONVILLE — Wal-Mart Stores Inc.’s stock price has hit record highs in recent days, a development that analysts attribute to better merchandising and to fears among investors that the nation’s economic recovery is slowing.
The company’s stock, they said, is viewed as a safe haven in a sluggish economy when consumers are looking harder for ways to save money.
Wal-Mart also gets credit for restocking shelves with products previously removed from its stores, a move that had prompted some of its regular shoppers to take their business elsewhere.
“Their merchandising is much stronger,” said David Strasser, an analyst with Janney Montgomery Scott LLC in Philadelphia. He said the company appears to be building on a strong first quarter, when Wal-Mart reported earnings per share of $1.09, above its guidance of $1.01 to $1.06, and a 2.6 percent increase in sales at stores open at least a year.
In the current economic environment, Strasser said, many investors are looking for safe companies with good yields. His “fair value”rating for the stock is $72.
“The stock’s not cheap anymore, but it’s not expensive either,” he said.
In Mexico, where Wal-Mart is being investigated for reported bribes paid to local officials as it grew its business there, the company on Monday reported total sales were up 12.3 percent in June and sales at stores open at least a year were up 5.3 percent.
Ken Perkins, who runs Retail Metrics Inc. of Swampscott, Mass., said that with the economic recovery slowing, many investors are looking toward future gains. Wal-Mart is likely to benefit if forecasts for an economic pullback next year are accurate, he said.
An investigation into whether Wal-Mart violated the Foreign Corrupt Practices Act as it expanded in Mexico probably is a nonfactor in the company’s financial performance, Perkins said.
“People who aren’t overly idealistic understand that, unfortunately, that’s a way of doing business in parts of the world,” he said. “If they can’t do it, there’s always going to be another company from Europe who’s willing to, orfrom Asia. It’s just not a perfect world.”
Wal-Mart’s core business is running well, he said, and the stores are cleaner than in the past.
Camille Schuster, president of Global Collaborations Inc. and professor of marketing and international business at California State Universityat San Marcos, said Wal-Mart has succeeded by returning to its core message of everyday low prices.
“When they got away from it, they weren’t effective,” she said. “They have to really pay attention to consumers and give them the products they want, and they have to keep prices low.”
As for the Wal-Mart Mexico probe, she said, “consumers don’t have a very long memory. Give us name brands and low prices, we’ll keep coming to your store,” she said.
Randy Hargrove, a Wal-Mart spokesman, said Monday that the company does not comment on its stock price.
Wal-Mart’s stock closed Monday at $71.76 a share, up 40 cents, or 0.56 percent, on the New York Stock Exchange. Prior to Monday’s trading, the stock’s high for the year was $71.36.
Business, Pages 19 on 07/10/2012