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Jobless, Gas Prices Offset Wal-Mart's Expansion: Analyst

Although Wal-Mart Stores' expansion of its Express stores represents a step in the right direction, it will not be enough to offset the effects of high unemployment and gas prices, according to a Stifel Nicolaus report.

Walmart Truck
Source: Walmart

The investment banking firm predicts Wal-Mart will report earnings per share of $1.09 on Aug. 16. The consensus estimate for the retailer's earnings release is $1.08 a share.

For the fiscal year 2011, the investment banking firm expects second-quarter earnings of $4.41 share—lower than Wall Street estimates of $4.46 a share.

Stifel Nicolaus currently has a "hold" rating on Wal-Mart, as persistent unemployment among its core consumer base and high gas prices continue to put pressure on its supercenters.

In July, the first Wal-Mart Express store opened, which features a smaller store format that the retailer plans to implement in urban markets.

The world's largest retailer announced on Mondaythat its check- and card-cashing service would allow customers to pay for their purchases with more types of checks, and take additional forms of identification in order to boost revenue at the chain's stores.

The Stifel Nicolaus report follows an Aug. 2 downgrade of Wal-Mart by Jefferiesto "hold" from "buy." In the note, Jefferies analysts reduced their current price target to $56 a share from $61 a share.

WATCH:Mark Montagna, retail analyst at Avondale Partners, tells CNBC why he is more upbeat on Dollar General than Wal-Mart.


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Stifel Nicolaus does and seeks to do business with companies covered in its research reports.