Full-year sales grew 7% on positive comps and high single-digit growth in each of the three operating units. Management held costs in check to only 4% growth and helped net income increase to $13.4 billion. Earnings improved 9% to $3.40 per share and should continue to grow for the coming year, as management put earnings expectations between $3.45 and $3.60. Full-year cash generation improved markedly, as operating cash flow grew 12% to $23.1 billion and lower levels of CAPEX helped push free cash flow (FCF) to approximately $11.6 billion, or just under $3 per share.

Bottom Line
At about 16 times trailing FCF, and 14 times forward earnings, shares of Wal-Mart are no steal. However, Wal-Mart is outperforming peers like Target (NYSE:TGT), which recently announced corporate headcount reductions to offset “weaker than expected sales” at its own big-box stores. (BJ’s Wholesale Club (NYSE:BJ) will not release its fourth quarter and fiscal year end results until March 4, 2009.) Additionally, Wal-Mart offers downside protection from a protracted slump in global economic activity given that shoppers increasingly head to its stores to take advantage of low costs. Throw in a dividend yield of 2% and investors might expect a high single-digit annual return on investments for the foreseeable future. (Read more about dividend yield in our Investment Valuation Ratios Tutorial.)

By Ryan C. Fuhrmann