We maintained our Neutral rating on Wal-Mart Stores, Inc. ( WMT - Analyst Report ) following appraisal of first quarter 2013 results.

Walmart posted robust first quarter 2013 earnings of $1.09 per share, which outperformed the Zacks Consensus Estimate by 5 cents per share and the prior-year earnings by 11 cents. The first quarter 2013 results also exceeded the company's guidance of $1.01 to $1.06 per share. The earnings improved on the back of better-than-expected top-line results.

Revenues climbed 8.6% to $112.3 billion, which also exceeded the Zacks Consensus Revenue Estimate of $110.6 billion. We are encouraged by the positive U.S. comparable sales of 2.6% in the quarter, which were driven by improved traffic and product offerings. The results also exceeded the company’s guidance of flat to 2.0% growth.

We are impressed with the company’s size and scale of operations. The company’s significant exposure in the international markets puts it among the top 3 largest retailers in the world. Walmart also continues to expand internationally and in the emerging markets through accretive acquisitions, new store growth and positive comparable store sales.

Further, Walmart has also been focusing on expanding its online business, where it holds the sixth position. It has already developed its online businesses in U.S., U.K., Canada and Brazil. To further expand its e-commerce business, Walmart has increased its controlling stake to 51% in Chinese Internet retailer Yihaodian. Besides, the world’s largest retailer acquired the Vudu streaming video service from its rival Netflix Inc. ( NFLX - Analyst Report ) in February 2010 and California-based technology company Kosmix in April 2011, demonstrating its commitment to e-commerce.

However, the retail giant has not been able to enter the lucrative

Indian markets and tap a large customer base of $1.2 billion, even though it has a significant international presence. The proposal to allow 51% foreign direct investment in India by multi-brand retailers like Walmart would have provided a good option to enter Indian markets. However, it raised debates in India and thus the Indian government has suspended the proposal for the time being.

Additionally, Walmart remains exposed to unfavorable foreign currency translations due to its considerable international presence. With rising investments in markets outside U.S., Walmart also faces economic and political risks. In addition, the company operates in a highly competitive retail market. Walmart also needs to be more competitive, as U.S. shoppers seek for discounts on items to cope with high unemployment. Moreover, we remain cautious of the weak economy and the rising costs, which keep us on the sidelines.