Vladislav Shchukin
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Wal-Mart. Flying to Growth.

   Today we would like to talk about the Wal-Mart Inc. Of course, it is the leader of the US retail market, which has distribution channels in all states and in most cities. This rapid growth in the market not only contributes to favorable contracts and the possibility of dumping the smaller vendors, but also to the scrutiny of Antimonopoly Service.

    During the last year decrease in revenue was significantly associated with a long-term decline in demand for a number of consumer goods. This has a negative impact on the behavior of investors, who began to lose confidence in Wal-Mart. However, the company has more ways to make their shareholders richer. A huge amount of cash and marketable securities, as well as the relatively low duty of industry open space for the development of new projects. At the same time, over the past four years, revenue and profit of the company tended to increase. Perhaps the company will make up for lost sales at the beginning of this year, improving on their seasonal rise in sales.

   In confirmation of the above, the company recently has introduced the latest quarterly financial report. Submission of the financials was a good sign for investors: sale in the US in the last quarter rose by 1.7%, while the number of customers increased by 1.5%.

   However, despite the increase in the number of sales and revenue growth, the company is also experiencing the difficulties, which is faced by the entire retail: a long-term decline in consumer demand for various product categories. As a result, for the Wal-Mart Inc. last quarter ended reduction in profit by 11%.

   The long-term decline in demand for goods Wal-Mart tries to compensate for innovations that can attract new customers and strengthen the loyalty of regular customers. Most recently, the company announced its intention to develop a delivery system using drones. The company applied to theFederal Aviation Administrationfor an exemption from current regulations recently, according toUSA Today. The company is already using drones on its territory, and now decided to try this tool for the delivery of goods to online store users.

   This innovation, of course, would greatly increase the number of sales is only due to the fact that the buyer would be interesting to see how the purchase flies straight to her door. However, with the introduction of drones in the "staff" is associated with certain costs and risks. Firstly, the necessary to develop software for accurate delivery to the right address without human intervention. Secondly, the question remains unclear about the possibility of drones flying in certain areas and the delivery of the goods, for example, to an apartment. Thirdly, Wal-Mart can just did not get permission from the Federal Aviation Administration. In addition, the same permission is now seeking by Amazon Prime Air, which means that in the case of permission for commercial use of drones Wal-Mart will not be a monopolist in a new retail sector.

   However, in addition to a possible launch of the project, on the growth of sales naturally affect the seasonal increase in sales before Christmas, when all Americans will go to the store for gifts for loved ones. For Wal-Mart is a common phenomenon, and yet it has a positive impact on the financials of the company and attract investors.

   It is clear that Wal-Mart is a classic dividend stock. Industry features cause stable cash flows, although there is seasonality, which may predict with some accuracy. Consistently strong market share and stable revenues at a low level of debt release Wal-mart as a good asset for investors interested in dividend yield, for example, institutional investors exempted from tax on dividends.

   According to the indicators RSI and MACD very strong oversold shares can be determined. Despite being in a price range falling trend it can be seen a small retracement of price after the new quarterly reporting. Today there is a lack of information for a definite answer, but unexpectedly successful financial results and interesting for investors news about operational innovations may be a signal to passage of a bottom and a further rise.

   Our recommendation: BUY