Virginia Postrel thinks Daniel Akst has WM's number. I dissent (unions play a far bigger role in criticism and I think that the unions will not get to WM, and that WM has already gotten to them), but I'll leave that to another post.
Here, I want to focus on one paragraph in Mr. Akst's Sunday column in The New York Times.
Mr. Akst, who is a fine business commentator and sometime Wal-Mart shopper, wrote that WM shoppers are having it good at stockholder expense:
For several years now, the shareholders, who have more than $200 billion tied up in the company, have not done especially well. Since the end of 1999, Wal-Mart stock is off 23 percent, while Target is up 43 percent and Lowe's is up 95 percent.Fundamentally, I agree that WM stock has been an underperformer. But Akst does something rather fishy to get his figures. To check this out for myself, I graphed a stock price comparison of Wal-Mart with Target since 1/1/2000, reproduced below. It confirms Akst's numbers -- -23% for Wal-Mart, + 43% for Target:
But why would Akst compare WM's stock price today with the end of 1999? Why not the end of 1998 or 2000?
The answer is obvious once you look at a ten year picture of WM's (split-adjusted) stock price:
Notice anything odd? That's right! Akst picked WM's historical high as a baseline. ; he cherry-picked his date of reference to make WM look especially bad! It turns out that very, very few investors will have realized a 23% loss by investing in WM over the past 5 years.
Of course, noting this does not refute the underlying claim of poor stock performance. Since the peak in WM's stock price at the end of 1999, the stock has leveled off and fluctuated in the 50s. I'd say don't count WM stockholders out yet, since a price dip has happened before--between 1993 and 1997--right before WM's stock took off.
Still, over the past 10 years, WM's stock has fared pretty well, but not compared to Target:
And for the sake of completeness, here's WM vs. Lowe's (a home improvement store, huh?), which fits Dan Akst's picture:
But why doesn't Akst compare WM to his own preferred warehouse discount center, and one of Sam's Club's main rivals, Costco? Because CostCo's stock price crashed in 2000, and it doesn't fit Akst's story:
Also, I'd like to note that WM's stock dividends are far higher than it's rivals, and have increased annually every year since 1974.
WM's 60 cent (1.2%) dividend puts Target [32 cent (0.6%)], Lowe's [16 cents (0.3%)], and Costco [40 cents (0.9%)] to shame.
Posted by Kevin on March, 8 2005 at 04:35 PM
