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Company's choice: analysts read little into timing of Wal-Mart stock split announcement.

IF THERE WAS ANYTHING peculiar about the timing of the recent stock split announcement of Wal-Mart Stores Inc., nobody's saying.

Some things are just inevitable, market analysts explain.

A Wal-Mart spokesman says the decision was based on the strength of various economic indicators, which pointed to good economic times ahead.

Perhaps the ho-hum reaction is not so surprising. After all, it was an event that had been "on the brink" of happening for some time and had an anticlimactic quality when it did.

Analysts began 1992 predicting the 2-for-1 split. Many thought an announcement would come at Wal-Mart's annual shareholders' meeting last June.

When that did not happen and year's end drew near, many thought the announcement would hold until the next shareholders' meeting.

Instead, the news came on Jan. 22.

Wal-Mart officials said the company would split its stock effective Feb. 25, increasing the number of outstanding shares from 1.149 billion to 2.298 billion.

The stock closed at 59 1/2 the day before the news.

The company's stock has split about every 26 months, when the market price hovers about $52 per share.

John Barnes, a vice president and financial consultant with the Little Rock office of Shearson Lehman Brothers Inc., believes there was "a little bit of investor disappointment" when the stock did not split last year. That may have contributed to the stock's "lackluster performance" during much of 1992.

Stock lulls aside, the company continues to post increased earnings each year, and the stock remains noteworthy for its growth potential.
May 1971 $46/47
March 1972 $46/47.50
August 1975 $23
November 1980 $50
June 1982 $49.87
June 1983 $81.62
September 1985 $40.75
June 1987 $66.62
July 1990 $62.50
February 1993
Source: Wal-Mart Stores Inc.

Although there is not yet official word, the company is expected to post a 20-25 percent increase in earnings in '92, probably more toward the high end, analysts predict.

William Whyte, a securities analyst with Stephens Inc. of Little Rock, says when Wal-Mart stock did not split last year, he figured the company would wait until June to announce a split.

At the time of the January announcement, the stock was slumping a bit compared to its pre-Christmas value.

"But once they announced the split, it shored it up nicely," Whyte says.

Taking past splits into account, the value of the company's stock reached an all-time high when shares sold at 66 1/4 on Feb. 2.

The upcoming split is the 10th since Wal-Mart went public in 1970.

A split is an increase in a company's number of outstanding shares of stock to make the stock more marketable without any change in the shareholders' equity or the aggregate market value at the time of the split. In a split, the share price declines. Dividends per share also will fall proportionately.

Wal-Mart's announcement came after a series of negative factors throughout '92 that some analysts think may have inhibited the stock.

In April, company founder Sam Walton succumbed to cancer, possibly contributing to the stock's dip that month to a low of 51 3/8. Then, a flurry of media reports subjected Wal-Mart to a degree of adverse publicity the company had never experienced before.

This trend culminated with a Dec. 22 report on NBC's "Dateline" that took a critical look at Wal-Mart's commitment to its "Buy American" campaign.

Although the company announced its stock split exactly one month after the negative "Dateline" report, most analysts discount a direct relation between the two events. Instead, they say, Wal-Mart officials simply decided the time was right.
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Title Annotation:Wal-Mart Stores Inc. in Little Rock, Arkansas
Author:Walters, Dixie
Publication:Arkansas Business
Date:Feb 8, 1993
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