(MONEY Magazine) – Wal-Mart founder and chairman Sam Walton just shrugged when the shares of Wal- Mart Stores fell to $26.75 from $35.25 and he lost nearly $2 billion in the week that ended with the October crash. And why not? With more than $6 billion left, Walton remains the richest man in America by most reckonings. Besides, at age 69, he is just too busy with a new retailing scheme known as hypermarkets -- one in Garland, Texas is shown above -- to fret about paper losses. ''We think Wal-Mart is on the leading edge of the next trend in retailing,'' says analyst Margaret Gilliam at First Boston. Analyst Edward F. Johnson of Johnson Redbook Service, a New York City research firm specializing in retailing, believes that hypermarkets, a concept long popular in France but new to the U.S., could contribute as much as 10 percentage points annually to Wal-Mart's earnings growth in the 1990s. During the next two to three years, he expects that sales increases at Wal-Mart's 1,200 stores, combined with stringent controls on distribution costs, will enable the company to grow 25% to 30% annually. Wal-Mart, with revenues of $16 billion the third biggest retailer in the U.S., opened its first hypermarket, the 222,000-square-foot store in Garland, last December. The store, where shoppers buy everything from groceries to a haircut or an oil change, is more than three times as large as one of the chain's typical stores and has been drawing huge crowds of 60,000 a week. Wal- Mart, which operates the Garland store in partnership with the Cullum chain, also opened Hypermart USA in Topeka last January and plans to open two more later this year -- one in Arlington, Texas, the other in the St. Louis suburb of Ferguson, Mo. Over the past 10 years, Wal-Mart shares have risen a phenomenal 4,278%. The stock's recent price/earnings ratio of 18.1 was about 1.4 times that of the S& P 500. For most of the 1980s, however, Wal-Mart's P/E has been 1.8 times the market multiple or higher. A fair valuation for Wal-Mart stock, Johnson believes, would be 25 times 1988 earnings estimates. That would translate to about $36 a share, where he would consider selling it.

CHART: WAL-MART STORES

Recent price $26.25 52-week range $43 to $20

Est. earnings P/E ratio per share 1987 $1.10 23.9 1988 $1.45 18.1

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