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Wal-Mart Shares Worth a 'Nibble,' Analyst Says

WalMart
WalMart

Is Wal-Mart Stores' stock still "dead money"? That was the question taken up by Patricia Edwards, managing director at Wentworth, Hauser and Violich, and Robert Buchanan, retail analyst at A.G. Edwards. They joined CNBC's Liz Claman on "Morning Call."

Wal-Mart Stores warned Tuesday that its current-quarter profit could miss Wall Street expectations. Edwards said Wal-Mart shares are "incredibly reasonable right now," though the managing director conceded that stock in the world's largest retailer had been "dead money for at least three years."

Why the current optimism? In addition to citing acceptable earnings growth, Edwards investigated several stores first-hand, and saw locations that "looked a lot better" and offered a "better consumer experience." However, she advises investors to "start to nibble" at the stock, rather than buy "whole hog."

Buchanan is more hesitant to recommend Wal-Mart shares. He pointed to "unresolved issues," including a failure to "properly interpret fashion" for its core customers -- and, perhaps controversially, poor "employee morale." The analyst said Wal-Mart's previous earnings growth guidance of 11% to 13% per year is "just too optimistic." He believes "8% is more like it."