Jack, in away, you've helped me make my point. Current international sales represent only 5% of WMT's volume. And they have been losing money internationally.
Second, WMT is touting that 40% of their sales will come from international operations. That means they will have increase sales more than 800%, assuming domestic grows modestly. To do this, they must penetate the European and Asia markets, markets which they have not been able to show any success in.
This fundamental challenge for me does not justify a PE of 25. If WMT was trading at a 16, or even at a 20 PE, you'd get no arguments from me. I just feel WMT is currently over valued, and I don't believe they can be as much of a factor in the European and Asian markets, which they must be, to grow at the rates they are telling investors.
(Dollars in millions)
Quarter ended April 30, Percent
1997 1996 Increase
Wal-Mart $18,187 $16,229 12%
Sam's Club 4,642 4,449 4
McLane 1,266 1,097 15
International 1,314 997 32
Total Company $25,409 $22,772 12%
Good Trading. LF (One of us will be right by the end of July.-g-) |
