The stock is currently trading at its highest price in the last 52 weeks. Forward price to earnings of 21 has been as impressive, and the stock pays its investors $0.275 in dividends on earnings per share of $4.11. Costco Wholesale Corporation (NASDAQ:COST) also spent $3 billion to pay a special dividend of $7 per share late last year. With a current dividend yield of 1.1%, I believe that the stock will continue to enjoy favorable shareholder sentiment. However, when judging the stock’s financial metrics next to Wal-Mart Stores, Inc. (NYSE:WMT)’s, I firmly believe the latter to be more secure and viable investment alternative, especially considering its outstanding performance in the last couple of quarters.
Target Corporation (NYSE:TGT) is another rival of Wal-Mart that has posted a notable performance in the last few quarters. The stock has a market capitalization of more than $43 billion and an average trading volume of 5.5 million. On account of encouraging market conditions, the company has maintained a healthy dividend history with a dividend rate of $0.36 against earnings per share of $4.38 — with a current dividend yield of 2.2. Also, analysts expect $4.69 in EPS for the fiscal year 2014, and the current stock price is 14.3 times that figure.
Although all these leading financial metrics seem run-of-the-mill when set against Wal-Mart Stores, Inc. (NYSE:WMT)’s recent financial performance, when evaluated independently; the stock’s performance since the beginning of this year is commendable. Although Target Corporation (NYSE:TGT) is one of the largest discount retailers in the US, with yearly revenue of almost $75 billion in 2012, Wal-Mart remains a more attractive option for those investors seeking higher capital returns and security on investment.
A rising threat
Despite the fact that Wal-Mart continues to be a secure investment and investors are encouraged about the stock performance, I won’t underestimate its many competitors, especially as they endeavor to penetrate into emerging markets. PriceSmart, Inc. (NASDAQ:PSMT) is a company that continues to make an impression by switching to a strategy of putting into practice a low margin policy in the successful attempt to increase its sales. Consequently, most of its revenue growth has come from same-store sales and not through new stores expansion alone. No wonder, its revenue forecasts have continuously surpassed expectations.
The bottom line
Despite of the rising competition, it’s my view that Wal-Mart will continue to expand and capture market share in the domestic and international markets, finding new ways to innovate, as it has proven time and time again. From entering the online consumer electronics market to expanding to emerging economies, Wal-Mart will offer higher returns and greater yields to investors in the future. For this reason, I strongly believe that the stock remains quite compelling on a risk-adjusted basis and would prove a lucrative addition to your portfolio.
The article This Company is Still The King Of Retail originally appeared on Fool.com and is written by Nauman Al.
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