Wal-Mart's Buyback Plan Grows & Grows... Could Take Itself Private By 2025 (WMT)

Wal-Mart Stores, Inc., (NYSE: WMT) is hosting its annual shareholder meeting today.  As this stock has been dead money for a decade, the heat is on and the company is trying to show its shareholder-friendly plan.  By our math, the company is buying back so much stock that at the current rate it could end up buying back all of its free float shares sometime around the year 2025.

The company just approved a new $15 billion share buyback plan that replaces the prior $15 billion plan announced last year.  Of the prior plan there was some $12.9 billion in stock that was actually purchased over the last year.  If you divide the $12.9 billion by the 244 million shares, you get an average price over the last year of $52.87 on the stock.  244 million shares is close to 1 million shares a day, and the stock’s average daily volume is just over 10 million shares.  That is nearly 10% of the daily trading in shares tied to teh company itself.

We are generally not big fans of share buybacks, but this combined $30 billion is an impressive figure with a $186 billion market cap.  That translates to roughly one-sixth of the company being bought, and you could interpolate that happening in a two-year period.  As part of the plan to return capital to shareholders, Wal-Mart said that in this year it has also increased the current annualized dividend by about 21% $1.46 per share.  Keep in mind that this dividend rate is the same as the last two quarters.

Wal-Mart shares are starting to respond.  The stock opened down at $53.15 after a $53.55 close on Thursday, but right before 10:00 AM EST we have the stock trading up 0.5% at $53.83.

Wal-Mart says that it now serves customers and members more than 200 million times each week at its 9,000+ retail locations.  Besides the Wal-Mart and Sam’s Club brands you are used to here in America, Wal-Mart’s total portfolio of stores is actually 60 different banners and in 15 countries.  It also employs more than two million workers globally.

More data will be coming out throughout the morning, so without formal guidance this may be considered an incomplete report.

JON C. OGG