Wal-Mart’s US Store Count Expected to Rise

Wal-Mart (NYSE:WMT), the pioneer of the big-box retail format, is seeing a steady rise in its number of US stores. The company’s store count has shown strong resistance despite the recessionary environment. Wal-Mart, known for its wide choice of merchandise at low prices, competes with large retailers like Target (NYSE:TGT), BJ’s Wholesale (NYSE:BJ) and Costco (NASDAQ:COST).

Around 62% of Wal-Mart’s stock price value can be attributed to business from its US Wal-Mart stores.  We currently have a Trefis price estimate of around $65 for Wal-Mart’s stock, about 23% above the current market price of $54.

In the past, Number of Wal-Mart US Stores has increased from 3,289 in 2005 to 3,708 in 2009. [1]  Wal-Mart has traditionally catered to lower income households, but with a growing presence in urban markets, Wal-Mart has the opportunity to tap into higher income spenders.

The average of forecasts for Number of Wal-Mart US Stores created by Trefis members indicated a projected increase from 4,020 in 2010 to 4,354 by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 3,823 in 2010 to 4,125 by the end of the Trefis forecast period. The member estimates imply an upside of 4% to the Trefis price estimate for Wal-Mart’s stock.

However, due to its massive size, Wal-Mart runs the risk of cannibalizing its own sales. This could discourage Wal-Mart from further store expansion.

You can drag the forecast trend-line above to express your own view, and see the sensitivity of Wal-Mart’s stock to Number of Wal-Mart US Stores.

Our complete analysis for Wal-Mart’s stock is here.

Notes:
1. Number of Wal-Mart US Stores is reported in the company’s SEC filings.