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  3. Sometimes, over a span of many years, a business will continue to grow, generating ever-increasing amounts of cash, repurchasing

Sometimes, over a span of many years, a business will continue to grow, generating ever-increasing amounts of cash, repurchasing

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问题     Sometimes, over a span of many years, a business will continue to grow, generating ever-increasing amounts of cash, repurchasing stock, paying increased dividends, reducing debt, opening new stores, expanding production facilities, moving into new markets, etc. , while at the same time its stock price remains stagnant (or even falls).
    When this happens, the average and professional investors alike tend to overlook the company because they become familiar with the trading range.
    Take, for example, Wal-Mart. Over the past five years, the retailing behemoth has grown sales by over 80%, profits by over 100%, and yet the stock price has fallen as much as 30% during that timeframe. Clearly, the valuation picture has changed. An investor that read the annual report back in 2000 or 2001 might have passed on the security, deeming it too expensive based on a metric such as the price to earnings ratio. Today, however, the equation is completely different—despite the stock price, Wal-Mart is, in essence, trading at half its former price because each share is backed by a larger dividend, twice the earnings power, more stores, and a bigger infrastructure. Home Depot is in much the same boat, largely because some Wall Street analysts question how fast two of the world’s largest companies can continue to grow before their sheer size slows them down to the rate of the general economy.
    Coca-Cola is another excellent example of this phenomenon. Ten years ago, in 1996, the stock traded between a range of $ 36. 10 and $ 54. 30 per share. At the time, it had reported earnings per share of $ 1. 40 and paid a cash dividend of $ 0. 50 per share. Corporate per share book value was $2. 48. Last year, the stock traded within a range of $40. 30 and $ 45. 30 per share; squarely in the middle of the same area it had been nearly a decade prior! Yet, despite the stagnant stock price, the 2006 estimates Value Line Investment Survey estimates for earnings per share stand around $ 2. 16 (a rise of 54%), the cash dividend has more than doubled to $1.20, book value is expected to have grown to $ 7. 40 per share (a gain of nearly 300%), and the total number of shares outstanding (未偿付的，未完成的) has actually decreased from 2. 481 billion to an estimated 2. 355 billion due to the company’s share repurchase program.
Wal-Mart is now trading at a much lower price because______.
选项 A、it has stored a large quantity of goods
B、it has become financially more powerful
C、it has been eager to collect money to prevent bankruptcy
D、it is a good way to compete with other retailing companies
答案B
解析 细节题。解题点在第三段。文章在第三段提到“Wal一Mart is，in essence，trading at half its former price because each share is backed by a larger dividend，twice the earnings power，more stores，and a bigger infrastructure”，可见沃尔玛的财务实力更强了，所以正确答案是B选项。
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