Did An Earnings Miss Make Wal-Mart Dirt Cheap?

| About: Wal-Mart Stores, (WMT)

Wal-Mart (NYSE:WMT) is wildly popular here at Seeking Alpha.

Brian Gilmartin calls it "a model of earnings consistency." Selerity Research called it "oversold" ahead of earnings that sent the stock down a fast 4%.

So is it time to jump in?

I detailed some of the bullish case today at TheStreet. Wal-Mart is the dominant physical retailer, and its Web operations are beginning to rival those of Amazon.com (NASDAQ:AMZN). It's still behind, but closer than ever before. When disaster hits, as with Hurricane Sandy, the company is quick to step in and win deserved plaudits.

Beyond that it has all the problems endemic to a large company, including an enormous workforce, which depends on keeping those costs in line. Some of that is political -- liberals call the company a "welfare queen" for its low-wage structure and constantly agitate for labor action.

But the company also indulges in political whining -- attacking a 4% raise in healthcare costs by applying cost increases on workers up to nine times that size and blaming the healthcare law for those employees going without coverage is, over time, self-defeating. It is needlessly wasteful of political capital that's hard to win.

What investors should be focusing on, in my view, are its continuing efforts to move away from the old "big box store" model. Look inside its earnings release and you'll find good news on that front. Sales at its Sam's Club warehouses and international outlets are rising almost twice as fast than sales at its conventional markets. To that you should add its online efforts, which include the Vudu video service; its commerce efforts, like the Bluebird card it's rolling out with American Express (NYSE:AXP); and its efforts at testing new store formats, like smaller groceries in crowded cities.

Wal-Mart has succeeded in gaining a greater share of consumer wallets over the last decade by expanding into full grocery stores, including perishables; by adding gasoline to the line at some outlets; and through its entrance into banking, online at all levels, and fuel. What it's doing with its capital advantages, in other words, outweighs any problems on the labor front.

Wal-Mart is a buy at these levels. It may not be the first stock on your buy list today, but it deserves to be there.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.