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Wal-Mart Stores Inc. (WMT - Analyst Report), one of the world’s leading retail operators, is scheduled to report its fourth-quarter and full-year 2011 financial results on Tuesday, February 22, 2011. The current Zacks Consensus Estimate for earnings and revenue for the quarter to be reported are $1.31 per share and $1.18 billion, respectively.

Third-Quarter 2011, a Synopsis

Wal-Mart, which faces stiff competition from Costco Wholesale Corporation (COST - Analyst Report) and Target Corp. (TGT - Analyst Report), reported better-than-expected third-quarter 2011 results and raised its EPS outlook for the rest of fiscal 2011. The retailing giant reported quarterly earnings of 95 cents a share, reflecting an increase of 15.8% over the prior-year earnings of 82 cents a share.

However, (excluding the benefit of one-time items) earnings were in line with the Zacks Consensus Estimate of 90 cents per share.

Management raised its full-year 2011 EPS guidance to a range of $4.08 to $4.12 per share. Prior-year guidance was in the range of $3.95 to $4.05. For the fourth quarter, the company expects earnings in the range of $1.29 to $1.33 per share. The Zacks Consensus Estimate for earnings for fiscal 2011 is $4.05 a share.

Management Guided

 At its last earnings conference call, Wal-Mart had forecasted fiscal 2011 earnings in the range of $4.08 to $4.12 per share. The current Zacks Consensus Estimate for fiscal 2011 is $4.05.

For fiscal 2011, management raised its EPS guidance from $4.08 to $4.12. The increase in full-year guidance reflects the tax benefit from the third quarter.

Fourth-Quarter 2011 Zacks Consensus

Analysts covered by Zacks expect Wal-Mart to post fourth-quarter 2011 earnings of $1.31 a share. The current Zacks Consensus Estimate represents a year-over-year increase of 11.9% and ranges from a low of $1.28 to a high of $1.35.

The current estimate did not change over the last 90 days as none of the analysts revised their estimates. However, the Zacks Consensus Estimate inched down 1 cent from $1.32 to $1.31 as two brokers had revised their estimates downward in the last 30 days.

Mixed Earnings Surprise History

With respect to earnings surprises, Wal-Mart has outpaced the Zacks Consensus Estimate over the last four quarters with an average of 3.42%.

Our Recommendation

Wal-Mart reported strong performance in the third quarter of fiscal year 2011, which was driven by strong international presence of the retail giant. However, intense competition across its various segments is a matter of concern. The significant international presence has boosted growth and we believe will continue doing the same in the coming years. The company also possesses a strong balance sheet.

However, the intense competition across its various segments and fluctuations in currency exchange rates, given its vast international operations are a matter of concern.

Wal-Mart currently holds a Zacks #4 Rank which translates into a short-term Sell recommendation. Nevertheless, on a long-term basis, we maintain a Neutral rating on the stock.

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