Summary - Valuing Wal-Mart In utilizing the fundamental data provided by the 2010 Richard Ivey School of Business Foundation article titled Valuing Wal-Mart - 2010, I have made the following conclusions regarding the value of Wal-Mart (WMT) stock as of February 2012. * Utilizing the constant growth dividend discount model (DDM), the value of Wal-Mart’s stock price is $60.20. The most recent closing price of Wal-Mart stock was $53.48. Given this information, the constant growth DDM valuation suggests that the Wal-Mart stock is currently undervalued. * Utilizing the two-stage DDM approach, the value of Wal-Mart’s stock price is $83.95. Similar to the constant growth DDM valuation conclusion, the Wal-Mart stock is currently …show more content…
Through the mid-part of the 80’s and into the early 90’s Wal-Mart had still produced annual earnings growth over 20%. It wasn’t until the early part of the century where Wal-Mart had produced earnings growth in the low teens to single digits. With that as supporting material, Wal-Mart has already experienced it’s growth and transition phases of its business cycle and is more in their maturity stage of their business. As of 2010, Wal-Mart is the largest retailer in the world with more than $400 billion in annual revenues across more than 8,000 stores. It would be. It would not be justifiable to utilize the three-stage dividend approach in valuing such a mature company. Capital Asset Pricing Model (CAPM) Valuations for Wal-Mart CAPM Utilizing the fundamental concepts of the Capital Asset Pricing Model (CAPM), the expected return for Wal-Mart stock is 7.01% [E(R)]. This is a result of a risk-free rate (Rf) of 3.68%, which was the provided 10-year government bond yield to use as a proxy for the risk-free rate. The beta (β ) of Wal-Mart was 0.66 according to the provided Bloomberg beta estimate. Additional data was provided on the U.S. market risk premium [E(RM) – Rf] of 5.05%. In following the general concepts of CAPM, there are some general assumptions: no transaction costs, all assets are publicly traded,
Today I will be trying to convince you to invest in the Wal-Mart Stores, Inc. What makes this stock great you may ask is that it has more than 5,000 stores and clubs nationwide. The stock cost $71.67 per share and the stock has gone up $1.59. Walmart first opened common stock to the public in 1970 and began trading on NYSE on August 25,1972. Walmart has emphasized the importance of keeping its merchandise in stock for shoppers. The company’s stock have risen about 15% this year. Wal-Mart is the world's largest retailer. The employees are more evident as Wal-Mart becomes a more pleasant place to shop. Walmart has said it will invest billions in lowering
Wal-Mart Corp has had very inconsistent asset-to-equity ratio form year to year which makes it difficult to draw any conclusion regarding investment. Such inconsistency could be an indication of
In 2011, Walmart's debt to equity ratio was that of 72.75 while the industry average was 55 and it exceeded the range of comparability by a significant amount(Stock-analysis)(Appendix B). The debt to equity ratio indicates how much debt a company has for every dollar of shareholders' equity. Walmart's value of 72.75 is high especially when considering the trend for the past three years. One reason for Walmart's high debt to equity ratio could be that they have been aggressive in financing their growth with
I was confident that I would see an increase in stock price due to Black Friday shopping. I decided to invest stock in Wal-Mart Stores, Inc. which operates in both retail and wholesale business. Sam’s Club, Walmart international, and Walmart US are the business segments that it operates under. Wal-Mart Stores Inc. has nearly 14.69 billion dollars in net income; however, from 10/17/16 to 12/08/16 its stock price only increased by 2%. The Monday following Black Friday, the stock price was only at $71.19.
First, it is important to understand that Walmart, being the economic super power it is, developed extremely quickly. According to the Company Profile Walmart Stores, Inc., Walmart was established in 1969, and shortly thereafter in 1972 become publicly traded on the New York Stock exchange. As the company continued to grow, in the 1980’s the company diversified into Supercenters, Sam’s Club (membership warehouse club), and even international operations. Walmart expanded and began to sell household items (2000), the launch of their “No Boundaries” cosmetic line (2001), an online music store (2004), the completion of Walmart Site to Store (2007), Walmart prepaid debit cards (2007), their very own home furnishing brand “Canopy” (2008), and finally their very own line of Sam’s choice coffee (2008). In 2009 the company took a huge leap
experiences a drop of 4.1% while Wal-Mart enjoyed a 5.1% jump, which resulted in a drop of 2.3% to $2.2, as well as a 40.7% collapse in the fourth quarter, whereas, Walmart rose 5.9% to $13.5 billion (Kessler, 2009).
Wal-Mart was founded 52 years ago in Rogers, Arkansas by a man named Sam Walton. He wanted to start selling products at low prices to get higher sales. In 1945 he bought a branch, and with sales increasing to 45% within the first year, Walton’s store received $105,000, which is about $1.38 million in today’s market. Every year after that, sales were on a steady rise. In 1970, Wal-Mart had 38 stores, 1,500 employees, and sales of $44.2 million. Ten years later there were 1,000 more stores, and sales of $15.9 billion. Today their sales revenue has been $473 billion. They employ 2.2 million people worldwide, 800,000 of those employees are international
Wal-Mart is said to be “a template for 21st Century capitalism” [1, pg 3] they hold a reputation for low prices; however this reputation is not reflective of their profits, as seen during the fiscal year of 2008 Wal-Mart earned $12.73 billion dollars. [2] With such sizable
According to its company's website, Wal-Mart's corporate mission states the following; " We save people money so they can live better." This ambiguous statement is backed up by the company expressing its financial priorities: growth, leverage and returns. Growth for Wal-Mart is measured in net sales, where in 2011 they had $419 billion in total net sales. Leverage is measured by operating expenses where in 2011, 19.3% of their total sales was dedicated to operating expenses. Returns are measured in two separate ways; return on investment and free cash flow. In 2011, Wal-Mart earned 19.2% return on investment and their free cash flow was $10.9 billion.
Second the company operates under a very advance information technology. Wal-Mart is able to manage its products around the whole world and enables their management staff to take quick effective decisions. Towards his stock valuation, historical prices determine that Wal-Mart’s stock is a relative stable investment; the stock is built for long term investments.
According to Fortune 500 (2008), Wal-Mart CEO, Lee Scott dramatically cut prices on 15,000 items because of the brutal fourth-quarter retail forecasts. He cut the prices a staggering 20 percent to lure in shoppers for the holidays. By doing so, Wal-Mart pressured other retailers in the industry to pinch already tight margins. Fortunately for Wal-Mart, the method worked. Wal-Mart grossed $100 billion, breaking its fourth-quarter sales record. Wal-Mart also beat a large competitor, Target, for the first time in almost a decade. CEO, Lee Scott assumed the worst because of the fourth-quarter retail forecast, and did what many retailers don’t want to do, cut prices so dramatically, it almost becomes a scare
Today with an annual revenue of $483 billion, Wal-Mart is the largest business worldwide. It has been very profitable for long-term stockholders to own stock in Wal-Mart. Regardless of the substantial success, there have been some struggles within the company in the past few years. In its fiscal 2014, Wal-Mart produced earnings-per-share of $5.11 and has declined since then. This was due to declines in net margins and sales.
According to the press release dated February 18, 2010 (Bentonville, Ark), Wal-Mart Stores, Inc. reported financial results for year ended January 31, 2010. Net sales for the fourth quarter were $112.8 billion, which was a 4.6 percent increase from fourth quarter of the previous year. Diluted earnings per share were $1.23—up from $0.96 from the previous year. Adjusted earnings were $4.5 billion ($1.17 per share). (“Walmart Reports”, 2010).
In 1962, Wal-Mart was built sometime by Sam Walton in Roger, Arkansas. Wal-Mart has 5,100 stores and clubs all over the United States and a sum of 8,300 unit's global. The company was able to employ something like over 2 million associates from all over the world and about 2.4 million in the United States. Wal-Marts average annual total income rate was somewhat in excess of 10% for the three years from the fiscal year that is ending 2009 to the fiscal year ending 2011 (Blanchard, 2008). Research shows that they also had what was known as a stock split of 100 %; Wal-Mart was able to see this split 12 times all through the eras of 1973 through 2002. They have received many awards and were categorized 5th in Fortune magazine's "Global Most Well-regarded All-Stars" as the third most appreciated corporation in America (Wal-Mart, 2013)
In 1962, Sam Walton opened the first Wal-Mart in Rogers, Arkansas. Little did Walton know that a few years later, his company would be transformed into Wal-Mart Stores, Inc. Wal-Mart officially became a publicly traded company in 1970, selling their first stock at $16.50 per share (Our History, 2016). In today’s society, Wal-Mart serves many different uses across the globe. However, their consumers are typically Americans. It is the one-stop shop for the everyday American citizen. Wal-Mart serves use for consumers to purchase apparel, groceries, appliances, and much more. According to the Full Fortune 500 list for 2016, Wal-Mart is the world’s largest company by revenue (Fortune 500, 2016).