Is the Era of Wal-Mart Domination Coming to an End?

With shares of Wal-Mart Stores Inc. (NYSE:WMT) trading at around $72.98, is WMT an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Wal-Mart is refocusing on what originally led to phenomenal success. The refocus of domestic sales and price cuts should lead to improved results, but the phenomenal era for Wal-Mart is over. However, that doesn’t mean it’s a bad investment.

Competition is by far the biggest challenge for Wal-Mart. There’s a lot of competition from dollar stores, other big-box retailers, and superstores. However, online retailers are the biggest long-term threats, especially Amazon.com Inc. (NASDAQ:AMZN). Amazon has been bulldozing its way to success, destroying smaller competitors with ease. Perhaps it’s karma considering Wal-Mart did the same to mom and pop stores. But this is a different economic environment. Of course, Amazon won’t put Wal-Mart out of business, but if trends continue the way they are now, then Amazon will continue to steal more market share from Wal-Mart going forward.

People of all ages shop at Wal-Mart, but pay careful attention to the people the next time you’re shopping at Wal-Mart. This doesn’t mean to go looking for large, toothless women wearing string bikinis… unless you’re into that. Instead, pay attention to the ages of the shoppers. You might notice that the majority of shoppers aren’t of the mobile generation. Why? Two reasons. One, they’re more comfortable shopping online. Two, it’s not cool to be spotted by friends at Wal-Mart. As the mobile generation ages and the generation after them moves into the consumer spotlight, the trend toward shopping online will gain even more momentum. This is bad news for Wal-Mart. That said, not everyone likes shopping online, and that will always be the case.

This article may seem anti-Wal-Mart to this point, but let’s take a look at some important numbers prior to forming an opinion on this stock.