Fox Business
Expand
Browse All Video
Watch Live

You're watching...

Wal-Mart in Crisis Control Over Bribery Scandal

Details

  • Description

    Morningstar Equity Analyst Michael Keara on Wal-Mart’s bribery scandal in Mexico.

  • Duration 4:33
  • Date

Clips

Also in this playlist...

Latest Video

Auto-advance: ON

Auto-advance
View All

Transcript

This transcript is automatically generated

-- down sharply after the company said it's investigating allegations that its Mexican subsidiary Wal-Mart to make -- Bribed officials with as much as 24 million dollars to get permits approved and then covered it up right now let's look at the stock.

Down nearly 5% for three quarters here.

At this level.

It would be the worst loss both percentage and point levels in three years joining us now Fox Business explosive.

To tell you what to do -- you -- it -- want to.

Is Michael carriage Chicago he's equity analyst at Morningstar.

Look okay -- got a couple of issues we want -- look at your number one the stock it is getting hit today.

Do you look at something like this and -- you assess.

Just hours after this story broke over the weekend in the New York Times that old as a buying opportunity or not you have to wait.

I don't think it really affects the fundamentals -- all retroactive.

I don't look at whether or not own stock now on something happened 56 years ago -- clearly creates a little risk of their son.

Possibility of senior management changes.

-- create some kind of uncertainty at these levels are still be buyers of Wal-Mart -- like Wal-Mart closer to fifty rather than closer to sixty or what strolled.

I'm about that comment about the management here Michael duke who is currently the CEO rammed the international business when all of this was allegedly going on there.

And if you believe the emails -- to see in the New York Times and they -- out pretty pretty efficiently.

Looks like -- due to something happened to this man does he get moved out if an outside investigation.

Proves that he knew about it tried to cover -- up.

Well it's never a good thing really CEO and you're being accused of violation of federal law I wanna get into.

Speculation on whether or not he stays or goes.

But what makes this case look different from my perspective is that we cover a lot of European multi national retailers right but I haven't you know and they've been accused bribes and sort of wrong practices in foreign countries but I've never seen -- sort of lead to the senior management level.

And to be honest to do I haven't seen this kind of level of detail -- it's more sort of accused or sort of it's known but not noon.

So this is really we're into new territory here but I want again to know whether or not he stays or goes.

It seems like from the New York Times article that you mention that.

Eduardo Castro Wright was the driving force behind the -- again I'm not here speculate on that -- just now I just look at the fundamentals of the stock.

Castro Wright was of course running Wal-Mart to Mexico now he's -- -- -- in Bentonville so that leads there then you've got the questions about.

And again I'm not gonna ask you to make comments about this but -- at least got of course who ran the company during many glory years and I mean we've.

For having it on the network of these got of course.

Made some big moves for the company and -- -- it's just a mess and here's why.

You've just made an important point you've never seen it go to the top management before for example and Alcoa has something going on right -- It's one guy in the Middle East General Electric one guy in the Middle East they dealt with it.

But this appears to be -- -- -- some wonder our reputation.

Will hit to us stock.

And that's what they were most worried about according to the emails that were discovered that they didn't want this to get out because it would hit the reputation we've seen that her company's before.

How damaging could that part of it -- Well there's -- a large investor base those Wal-Mart for its international growth prospects.

I mean clearly -- the questions some of -- prospects given what's happened walk on and in Wal-Mart Mexico.

But as well as sort of problems in China I don't know if you're aware of that some problems in China they had to sort of oust the leadership team there with a new one -- -- some problems in India for retailers as well.

So there's an investor base that owns Wal-Mart for international expansion -- that investor base sort of looks at this instructs the question those growth prospects.

-- I think it highlights is the enormous pressure -- that a lot of these senior management teams are to drive growth.

And also -- the pitfalls of international expansion so I think vision vision two overarching thesis when you look at the sort of problem.

You know what's gonna happen most likely is that you're gonna get some fine under FC PA.

And you might get some changes at the senior management mobile which of course never good for stock.

But again I think the fundamental driver of the stock is gonna be domestic US same store sales trend sold throughout the stock any sort of lost we've seen today.

If they start generating comps that are coming ahead of consensus.

You'll see them regain that lost pretty quickly.

Michael -- Morningstar equity analyst in Chicago thank you very much for shedding more light on this and about.

The stock they still -- -- believe that they're not changing -- 61 dollar fair value estimate for Wal-Mart although again today taking a hit thanks Michael.

Thank you very much.

Load More