Dollars and Jens
Tuesday, September 13, 2005
Should You Sell Wal-Mart?
Most people would say, "No, of course not, what kind of stupid question is that?" But here's an interesting case in favor.
Not a convincing case, in my estimation. I don't think the long-term economic effects of Katrina are going to be as dire as he suggests at the beginning of the article. And I think free cash flow is a better metric for a company whose capital expenditures are driven by maintenance rather than growth — Wal-Mart's capital expenditures are a lot higher than their depreciation expenses, and I don't think this is because the accountants are understating their depreciation costs by a factor of three.
Still, if Wal-Mart interests you, read the article and run the numbers yourself.
Full disclosure: I have no position in Wal-Mart (though I'm considering getting one). Also, the first sentence of this entry is stolen from the Simpsons.