If Wal-Mart Stores Inc. announces next week that it will slow its expansion in the U.S., investors are likely to applaud.

The company has grown at a ravenous pace, building hundreds of stores each year to increase its dominance of the nation's retailing. This year, it will erect as many as 370 U.S. stores to keep up with its typical annual square-footage growth rate of 8 percent.

But in recent years, Wall Street has become increasingly concerned that Wal-Mart's new stores are stealing sales from its older outlets. Another worry: the higher costs of opening stores in markets where it isn't already dominant.

Some investors and analysts prefer that Wal-Mart throttle back on its growth by next year or 2008, diverting money that would otherwise be spent on expansion to shareholder-friendly uses such as share buybacks and dividend increases or more extensive remodeling of older stores. Should Wal-Mart signal at its annual session with analysts next week that this will happen, the stock, which has risen more than 6 percent since early September because of falling gasoline prices, likely will get a pop.

In 4 p.m. composite trading Wednesday on the New York Stock Exchange, Wal-Mart's shares were up seven cents to $48.35, giving the company a market value of $202.2 billion. Its shares currently trade at 16.5 times estimated earnings for fiscal 2007, cheaper than its rivals. Costco Wholesale Corp.'s per-share multiple is 21.5, and Target Corp.'s is nearly 19.

"If they do rein in that 8 percent (expansion rate), expect deafening applause from the investment community," Goldman Sachs Group analyst Adrianne Shapira said. Ms. Shapira rates Wal-Mart's shares a "buy," with a 12-month price target of $57. She owns none. Her firm has done business with Wal-Mart in the past year.

Wal-Mart will end the speculation Monday, when it begins its meeting with analysts and investors in Teaneck, N.J. Some observers say signs point to a modest pullback of Wal-Mart's U.S. expansion. Top Wal-Mart executives acknowledged in June that they have cut back on opening new stores so close to established stores that they siphon sales from those older stores. Wal-Mart declined to comment further.

Merrill Lynch analyst Virginia Genereux predicts Wal-Mart will expand its U.S. square footage at a 6.7 percent rate next year. She rules out a significant pullback because it may take Wal-Mart a while to slow its momentum. Wal-Mart executives have talked of plans for an additional 1,400 stores in the U.S. in the future. Ms. Genereux rates Wal-Mart's stock "neutral" and owns none. Her firm has done business in the past year with Wal-Mart.

The growth-rate debate represents a growing split between Wal-Mart and Wall Street, which once idolized the Bentonville, Ark., retailer. Some analysts argue that the company no longer reaps lofty returns from slapping up hundreds of stores, as illustrated by its capital spending outpacing the growth of its operating cash flow since 2000. As Wal-Mart pushes into its final frontiers in the U.S. -- namely large cities, the Pacific Coast and the Northeast -- it is finding the costs of doing so higher and its sales weaker than in its traditional strongholds. Wal-Mart executives argue that the retailer's returns remain high and it should build as many stores as possible sooner rather than later because U.S. zoning laws will only get more restrictive.

Wal-Mart currently operates nearly 4,000 stores in the U.S., including its Sam's Club warehouses, and more than 2,700 abroad.

Not everybody wants Wal-Mart to slow its growth rate. Kevin Grant, co-manager of Harris Associates' $5 billion Oakmark Fund in Chicago, is among the investors who see Wal-Mart's U.S. expansion rate as a minor issue in comparison with the retailer's international growth and efforts to bolster sales in its existing stores. "We feel that this management team has proved themselves to be very focused on maximizing returns and on allocating capital wisely," said Mr. Grant, whose firm holds 9.9 million Wal-Mart shares.

Yet Carl Lytollis, head of U.S. equity research for Phillips, Hager & North Investment Management Ltd. in Toronto, would rather see some of the money that goes to U.S. expansion spent elsewhere, such as on share repurchases or higher quarterly payouts. He noted that McDonald's Corp. in April 2003 announced a turnaround plan that included reduced expansion, a beefier dividend and more share buybacks. McDonald's stock doubled within a year, and it has risen by more than 30 percent since. "I think the reaction would be somewhat similar with Wal-Mart," said Mr. Lytollis, whose firm, which has 63.3 billion Canadian dollars (U.S.$55.51 billion) in assets, holds 3.5 million Wal-Mart shares.

Some observers envision a compromise. Deutsche Bank analyst Bill Dreher said Wal-Mart could pare its square-footage growth but still open a steadily increasing number of stores by making its new stores smaller. The chief executive of the retailer's U.S. operations, Eduardo Castro-Wright, rose to prominence in Wal-Mart's Mexican operations from 2001 to 2005 by tailoring stores and their merchandise to local clientele. He has taken similar steps in the U.S. and launched an aggressive reduction of the inventory in stores. Thus, Mr. Dreher foresees Wal-Mart eventually needing less than the regular 200,000 square feet for a supercenter, its preferred format.

"While the number of new stores should increase at the same rate, the size of those more-efficient boxes will moderate," Mr. Dreher said. "With that, we will see an inflection point in return on invested capital."

He rates Wal-Mart's shares a "buy," with a 12-month price target of $58. He owns none. Deutsche Bank has done business with Wal-Mart in the past 12 months.