Does Walmart Think Its Own Shares Are Priced Too Low?
Today Wal-Mart Stores Inc. (NYSE:WMT) held its 41st annual shareholders meeting at the company’s increasing notorious headquarters in Bentonville, Arkansas. Headlining early action in the conference was an announcement from the board of directors that Walmart plans to take a huge number of its stock off the public markets, authorizing a corporate repurchase of some $15 billion worth of outstanding shares. The company plans to retire repurchased shares and return them to unissued status.
Wal-Mart’s announcement today is just another cog in the wheel of its continued campaign of public stock buybacks, which started last year when the firm used circa $13 billion dollars to buyback almost 250 million outstanding shares. As Wal-Mart continues to move towards reprivitazation, it has also substanitally increased its return on dividends, upping its yield by 21% since the buy-backs began.
Accoring to Wal-Mart Executive VP and CFO Charles Holley says the firm is doing exactly what it had set out to in corporate mission,”The combination of our annual dividend and share repurchase program indicates the strength of our company and its commitment to returning value to Walmart shareholders.” Wal-Mart (NYSE:WMT) has increased dividends to shareholders every single year since March of 1974.
There is some speculation that Wal-Mart’s buyback campaign (which would take another 10% of the company’s outstanding shares off market) comes in tandem with efforts to return the firm to a more private and centralized group of ownership. If these corporate efforts persist on an annual basis at the current rate, Wal-Mart will have repurchased all of its public-market shares by the year 2025. The stock is up slightly (.15%) in trades this morning.