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Here is a long-term analysis of Walmart (WMT). The article gives investors an overview of the company’s financial history, business diversification as well as the valuation level and dividend policy.Company Profile:
Walmart (WMT) is the world’s largest retailer. The company has operations in all 50 U.S. States and Puerto Rico. Abroad, Walmart operates in 14 countries though wholly-owned subsidiaries in Argentina, Brazil, Canada, Japan, the U.K, Chile and Mexico. In total, Walmart has roughly 9,000 stores under management.
Business Diversification:
The company operates in three segments: Walmart U.S. (61% of sales and 74% of profits), Walmart International (27% of sales and 20% of profits) and Sam’s Club (12% of sales and 6% of profits). Roughly 27% of sales came from abroad. Most of Walmart’s U.S. merchandise units are grocery stores (54%), entertainment stores (12%) as well as Hardlines and Health/Wellness units (each 11%).
Valuation of the Company:
Dividend Yield: 2.2% / 2.65% expected
Payout Ratio: 29.0%
5-Year Dividend Growth: 15.66%
Market Capitalization: 192.09 billion
Cash and Short Term Investments: 7.49 billion
Long-Term Debt: 43.84 billion
Cash flow from Operations: 23.64 billion
Capex: 12.69 billion
All pricing measures decreased over the past 10 years. Price to earnings ratio slipped in total by 67%, price to book ratio by 63% and price to cash flow by 68%. The price to sales ratio fell with a rate of 58% over the past decade.
Long-Term Fundamentals and Dividends:
The company had a strong track record. Sales of Walmart doubled over the past decade. Earnings before taxes and interest (EBIT) increased by 126% and net income finally grew in total 138%. Due to share buybacks, earnings per share rose 190%.
Walmart paid dividends since 1973. The company raised dividends for 35 consecutive years. Next Ex-Div. Date is August 10, 2011. Payments will be received on September 06, 2011. The latest dividend was the first quarter dividend at the same rate ($0.365).
Competitors:
The retail sector is an interesting investment field. Biggest competitors within the discount and variety store industry are Target (TGT), Costco Wholesale (COST), Family Dollar Stores (FDO), Dollar General (DG) and Dollar Tree (DLTR). An additional industry that attacks the traditional retail sector is the online retail industry. Biggest players are Amazon (AMZN) and Ebay (EBAY) and Liberty Interactive (LINTA).
Consensus Developments:
In accordance to Reuters, 31 analysts covered Walmart and submitted an outperform rating with a mean target price of $59.86 as of May 06, 2011. This value represents an upside of 8.79% compared to the close end price of May 06, 2011. The mean target price estimate decreased over the past 18 month by 1.23%.
Related Stock Ticker Symbols:
WMT, TGT, COST, FDO, DG, DLTR, AMZN, EBAY, LINTA
Full Disclosure: Long WMT, not intended to buy any stocks or obligations of the company within the next 72 hours. I don’t receive any compensation by the company.
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Disclaimer:
The presented data and material is for informational purposes only. Despite careful researches, we cannot guarantee the truth of the figures. The past operational performance as well as the stock performance and dividend developments do not guarantee a positive future performance. Please, before you buy or sell any stocks, you should do your own research and reach your own conclusion.
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