Wal-Mart (WMT) has lagged the rest of the market badly since the March recovery, in large part because it outperformed significantly on the way down.
With Amazon (AMZN) blowing out earnings and expectations for the Christmas season, the pressure is really on the big box retailer to deliver.
Deutsche Bank analyst Bill Dreher has a report from the company’s analyst day, during which they explained how they’ll grow through store expansion and higher productivity. What stuck out to us though was this chart of the company’s historical PE. Since its peak in 1999, it’s been on a long, slow decline to where it is now. That makes sense. Maturity and lower growth mean lower PEs. But this is just one of those things that doesn’t revert to the mean at all.
Anyway, if you think Wal-Mart is a good metaphore for America (still a business powerhouse, but with its go-go days firmly in the past), what does this say for any analysis that presume a return to any kind of fair value in the past.