The Motley Fool was founded by brothers Tom and David Gardner in 1993. Through our website, podcasts, books, newspaper columns, radio programs and quality investment services, we help millions of people achieve financial freedom.

It’s no secret that Wal-Mart (NYSE: WMT) has had a good year. The world's leading retailer has just announced its strong momentum into the holiday shopping season while improving its profit outlook for 2021.

However, it is better than what investors see by focusing only on the main sales and profit indicators. Let's look at some little-known data points that indicate that future shareholders will receive substantial returns.

Wal-Mart's 9% same-store sales growth was unexpectedly strong. In fact, this surge marked an acceleration in demand trends, with two-year sales growth accelerating to 15.6% from 14.5% in the previous quarter.

Beyond headline growth, news is even better. In stark contrast to other retailers that have recently announced earnings, Wal-Mart’s growth is mainly due to increased customer traffic. The chain’s transaction volume increased by 6% and average spending increased by 3%.

Grocery aisles are excellent, and sales soared by 10% as Wal-Mart gained market share from competitors such as Kroger. Executives said in a conference call with investors that food sales are growing at the fastest rate in six quarters. Chief Financial Officer Brett Biggs (Brett Biggs) explained: "Grocery, health and wellness, and clothing are leading the strong sales trend."

Wal-Mart's return on invested capital (ROIC) is at its highest level in many years. This key efficiency indicator jumped from 13.7% a year ago to 14.5%, thanks to several encouraging financial trends, including rising earnings and falling stock counts.

So far, Wal-Mart’s repurchase spending in fiscal year 2022 has increased to more than 7 billion U.S. dollars. But the chain also benefited from accelerated investment in its business-especially on e-commerce platforms.

"We innovate in the supply chain and increase production capacity," said CEO Craig Menear. "We are building businesses like Walmart Go Local, Walmart Connect, Walmart Luminate and [and] Walmart Plus." These initiatives include data services. Bets in high-growth areas such as subscription services may increase sales and profit margins in the long run.

Investors are pleased to hear Wal-Mart's statement that sales in core US markets will increase by about 5% during the holiday period. This prospect means that the company's annual sales this year will increase by another 30 billion U.S. dollars on the basis of the surge in 2020.

However, the best sign of a strong fourth quarter ahead is a 12% year-on-year increase in inventory. Usually, such a boost is a warning sign for the retail business. But given the accelerating demand trend and supply chain challenges hitting the industry, it is bullish in this case.

Wal-Mart uses its unique advantages, especially its influence in the retail industry, to package the products demanded by its stores and online departments by late October. Although this led to a decrease in cash flow in the third quarter, investors should treat this move as a down payment to prepare for the heavy holiday.

Moreover, as the business is improving efficiency, shareholders should see better returns from these sales growth at the end of 2021 and the next fiscal year.

The discount offer is only applicable to new members. The stock adviser will renew the subscription at the then quoted price. The price of the stock advisor is $199 per year.

Stock Advisor was launched in February 2002. Return as of November 25, 2021.

The average return of all referrals since its inception. The cost basis and return are based on the closing price of the previous market day.

Make the world smarter, happier, and richer.

Market data powered by Xignite.