WMT  Wal-mart Stores Inc.

Exchange

NYSE

Sector

Consumer Services

Industry

Department/Specialty Retail Stores

Market Cap.

233.86B

Vuru Grade

36.16/100

Current Price

$77.58
+0.69 (+0.90%)

Growth Price

$84.28
Undervalued by 8.63%

Company Metrics

  • P/E 17.62
  • P/S 0.48
  • P/B 3.15
  • EPS 4.4
  • Cash ROIC 12.04%
  • Cash Ratio 0.10
  • Dividend 2.04 / 2.68%
  • Avg. Vol. 8.91M
  • Shares 3.01B
  • Market Cap. 233.86B

Company Description

Wal-Mart Stores, Inc. operates retail stores in various formats worldwide. The company's Walmart U.S. segment offers meat, produce, deli, bakery, dairy, frozen foods, alcoholic and nonalcoholic beverages, and floral and dry grocery; health and beauty aids, baby products, household chemicals, paper goods, and pet supplies; electronics, toys, cameras and supplies, photo processing services, cellular... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Wal-Mart Stores Inc (WMT) Stock Is Perking Up!
Investorplace.com - 12 hours ago
I did just that after Monday's trading and discovered that Wal-Mart Stores Inc (NYSE:WMT) shares are percolating. WMT stock was able to rally a respectable 1% while the S&P 500 closed unchanged.
Wal-Mart Stores Inc. (WMT) Closes 2.12% Up on the Day for July 25 - Equities.com
Taking a Look at the Data Behind Wal-Mart Stores, Inc. (WMT) - StockNewsJournal
Better Buy: CVS Health Corporation vs. Wal-Mart Stores, Inc.
Motley Fool - Jul 19, 2017
CVS Health Corporation (NYSE:CVS) and Wal-Mart Stores, Inc. (NYSE:WMT) are fierce rivals. The fact that Wal-Mart is valued nearly four times greater than CVS doesn't change that fact one bit.
Why Investors remained confident on Chevron Corporation (CVX), Wal-Mart Stores ... - StockNewsJournal
The Fundamental Case for and Against Wal-Mart Stores, Inc. (WMT) - StockNewsGazette
Will Amazon Ruin Wal-Mart's Business?
Seeking Alpha - Jul 24, 2017
The net incomes from those sales were even more unbalanced, with Wal-Mart making over $3 billion vs. Amazon's $724 million.
Former Wal-Mart CIO to Lead IT at Glaxo
Wall Street Journal (subscription) (blog) - 6 hours ago
Former Wal-Mart Stores Inc. CIO Karenann Terrell is set to join GlaxoSmithKline PLC as chief digital and technology officer.
Better Buy: Wal-Mart Stores Inc. vs. Home Depot
Motley Fool - Jul 13, 2017
Home Depot wins the operating trends matchup across the board. Its nearly 6% jump in comparable-store sales growth last year was four times the 1.4% boost that Wal-Mart managed. The company is far more profitable, too, as it turned 8.4% of its sales ...
Wal-Mart Stores Inc: GS raises to "conviction buy" - Thefly.com - Times of India
Goldman Sachs Upgrades Wal-Mart - Investopedia
Should I Buy Walmart Stock?
U.S. News & World Report - Jun 28, 2017
In the first quarter of fiscal 2018, Walmart reported an astounding figure: 63 percent. That was the revenue growth rate for Walmart's e-commerce segment. The quarter before, WMT grew e-commerce sales by just 29 percent year-over-year, highlighting ...
Wal-Mart: Expect More Gains - Seeking Alpha
Wal-Mart Aims to Hit Amazon Where It Hurts - Motley Fool
Wal-Mart: Not All Is As It Seems
Seeking Alpha - Jul 9, 2017
I've been pretty critical of Wal-Mart (WMT) at times in the recent past for a variety of reasons. I haven't agreed with the company's strategy decisions, including buying Jet or its newly introduced online pickup scheme.
Wal-Mart Stores is Oversold - Nasdaq
Wal-Mart Stores Inc (NYSE:WMT): Hybrid Business Model Will Crush Amazon.com ... - Library For Smart Investors
Wal-Mart Stores Inc (WMT) Stock Remains as Strong as Ever
Investorplace.com - Jul 16, 2017
Last was supposed to be the week where all retailers took another leg lower. Amazon.com, Inc. (NASDAQ:AMZN) had its annual Prime Day this week.
Is Wal-Mart An Abusive Customer? - Seeking Alpha
Hudock Capital Group LLC Reduces Position in Wal-Mart Stores, Inc. (WMT) - Newburgh Gazette
Wal-Mart: Will It Thrive, Or Merely Survive?
Seeking Alpha - Jul 10, 2017
Not only did its online presence badly lag the competition, but also its physical stores were widely perceived as a lousy place to work and shop.
Torch Wealth Management LLC Buys Wal-Mart Stores Inc, Halliburton Co, iShares ...
Nasdaq - Jul 20, 2017
Torch Wealth Management LLC initiated holdings in Wal-Mart Stores Inc. The purchase prices were between $71.43 and $80.26, with an estimated average price of $76.1.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for WMT to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate WMT's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$77.58 Current Price

$84.28 Growth Price (DCF)

Undervalued by 8.63%


Growth Rate Assumed by Market: 3.76%


Future Free Cash Flow Growth Rate: 6.8%


Discount Rate: 15.0%


Show Free Cash Flow numbers

Growing Cash Return on Invested Capital over the past 5 years

WMT has continued to efficiently invest its financial resources in buildings, projects, and equipment, resulting in increasingly stronger returns. Look at its Annual Reports to determine future sustainability.

WMT has created $12.04 of cash for every $100 invested.
Figures in USD. Fiscal year ends in January
20132014201520162017
Free Cash Flow 12.69B 10.14B 16.39B 15.91B 20.91B
divided by
Invested Capital 123.51B 128.13B 129.30B 126.26B 125.03B
Cash ROIC 10.28% 7.92% 12.68% 12.60% 16.72%

Shrinking Return on Equity over the past 5 years

WMT has been shrinking returns with capital that shareholders have invested. This is a negative sign and demonstrates that both the business and management performance are weakening over time.

WMT has generated $13.23 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in January
20132014201520162017
Net Income 17.76B 16.70B 17.10B - -
divided by
Stockholders' Equity 76.34B 76.26B 81.39B 80.55B 77.80B
Return on Equity 23.26% 21.89% 21.01% - -

Excellent Business Performance over the past 10 years

WMT has been able to maintain profitability in good times and bad. This could mean WMT has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

WMT has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in January
2008200920102011201220132014201520162017
Free Cash Flow 5.42B 11.65B 14.07B 10.94B 10.75B 12.69B 10.14B 16.39B 15.91B 20.91B

Weak Balance Sheet

WMT's financial position is not ideal. The key is to check whether WMT is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in January
2008200920102011201220132014201520162017
Cash 5.57B 7.28B 7.91B 7.40B 6.55B 7.78B 7.28B 9.14B 8.71B 6.87B
Current Assets 47.59B 48.95B 48.33B 51.89B 54.98B 59.94B 61.19B 63.28B 60.24B 57.69B
Total Assets 163.51B 163.43B 170.71B 180.66B 193.41B 203.11B 204.75B 203.71B 199.58B 198.83B
Current Liabilities 58.45B 55.39B 55.56B 58.48B 62.30B 71.82B 69.35B 65.27B 64.62B 66.93B
Total Liabilities 98.91B 98.14B 99.96B 112.12B 122.09B 126.76B 128.50B 122.31B 119.04B 121.03B
Stockholder' Equity 64.61B 65.29B 70.75B 68.54B 71.32B 76.34B 76.26B 81.39B 80.55B 77.80B
Current Ratio 0.81 0.88 0.87 0.89 0.88 0.83 0.88 0.97 0.93 0.86
TL-to-TA 0.60 0.60 0.59 0.62 0.63 0.62 0.63 0.60 0.60 0.61

Consistent Reinvestment of Profits over the past 10 years

WMT has consistently retained profits. This may put WMT in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, WMT can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in January
2008200920102011201220132014201520162017
Retained Earnings 57.32B 63.66B 66.64B 63.97B 68.69B 72.98B 76.57B 85.78B 90.02B 89.35B
Retained Earnings Growth - 11.06% 4.68% -4.01% 7.39% 6.24% 4.92% 12.03% 4.95% -0.74%

Highly Competitive Industry over the past 10 years

It's likely that WMT is in an industry with low barriers to entry, spurring high competition. If Gross Margins are at least satisfactory, it's likely WMT invests heavily in R&D and Sales, General & Administrative expenses.

Only $2.88 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in January
2008200920102011201220132014201520162017
Net Income 12.73B 13.40B 14.85B 16.99B 16.39B 17.76B 16.70B 17.10B - -
divided by
Revenue 378.80B 405.61B 408.21B 421.85B 446.95B 469.16B 476.29B 485.65B - -
Net Profit Margin 3.36% 3.30% 3.64% 4.03% 3.67% 3.78% 3.51% 3.52% - -

Weak Pricing Power over the past 10 years

WMT is likely in a highly competitive industry, due to low barriers to entry. It's because of this, that WMT has been unable to raise prices and increase their profitability. This puts them in a poor position if inflation becomes an issue, as they would struggle to pass higher costs onto consumers.

Only $19.90 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in January
2008200920102011201220132014201520162017
Gross Profit 92.28B 99.45B 103.56B 106.56B 111.82B 116.67B 118.23B 120.57B - -
divided by
Revenue 378.80B 405.61B 408.21B 421.85B 446.95B 469.16B 476.29B 485.65B - -
Gross Margin 24.36% 24.52% 25.37% 25.26% 25.02% 24.87% 24.82% 24.83% - -

High Capital Intensity over the past 10 years

WMT spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

83.10% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in January
2008200920102011201220132014201520162017
Capital Expenditure 14.94B 11.50B 12.18B 12.70B 13.51B 12.90B 13.12B 12.17B 11.48B 10.62B
divided by
Net Income 12.73B 13.40B 14.85B 16.99B 16.39B 17.76B 16.70B 17.10B - -
Capital Expenditure Ratio 117.33% 85.81% 82.06% 74.73% 82.44% 72.64% 78.56% 71.20% - -

Very Strong Dividend History over the past 10 years

WMT has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests WMT is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in USD. Fiscal year ends in January
2008200920102011201220132014201520162017
Dividend Paid 3.59B 3.75B 4.22B 4.44B 5.05B 5.36B 6.86B 6.79B 7.01B 6.22B
divided by
Shares Outstanding 4.07B 3.95B 3.88B 3.67B 3.47B 3.39B 3.28B 3.24B - -
Dividend Paid Per Share 0.88 0.95 1.09 1.21 1.45 1.58 2.09 2.09 - -
Price at Year End 51.26 51.66 52.63 59.76 67.61 78.63 86.79 61.68 69.12 76.13
Dividend Yield 1.72% 1.84% 2.07% 2.02% 2.15% 2.01% 2.41% 3.39% - -

Strong History of Stock Buybacks over the past 10 years

WMT has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in January
2008200920102011201220132014201520162017
Shares Outstanding 4.07B 3.95B 3.88B 3.67B 3.47B 3.39B 3.28B 3.24B - -
Stock Bought Back - 3.06% 1.91% 5.64% 5.64% 2.51% 3.23% 1.23% - -
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Discussion
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3
Posted by quantumcanuck  (on March 27, 2012)
what are people's thoughts on walmart as a value stock? they have small margins and high capital intensity (which vuru doesn't like), but they're a strong company otherwise with consistent growth. if you play around with the sliders on the valuation tab, its easy to bring the growth price above the current price with reasonable assumptions.
3
Posted by gsanta111  (on March 29, 2012)
To get it at 50% undervalued, I had to put in 25% FCF rate and a 9.3% Discount rate.

Or 20% FCF and a 7% discount (which is the lowest discount on the slider).

Now, their gross margin is 25% but their profit margin is nowhere near that. (3.68%)

I don't think either of those FCFs is feasible
1
Posted by Honeybadger  (on March 30, 2012)
I agree w/ your calculations. Reviewing my original calculations w/ fair value @ 86, it did not include the latest year's numbers(either that or I have completely lost my mind, lol.) This would explain the wide difference between our fair value estimates. My calculations w/ the latest numbers pegs fair value at 65. That's keeping an 8% discount rate and a 15% FCF growth rate.
3
Posted by Honeybadger  (on March 28, 2012)
Looking at it from a Buffett perspective, it could be as much as 40% undervalued(fair value around 86). They've got a hell of a moat and great management. If you are going to buy a capital intensive, low margin company; buy the best and biggest one on the block. Sidenote: valuation calculated w/ a discount rate of 8%. Buffet generally uses the 10 yr treasury yield as his discount rate except in times of very low rates(like these). Buffett is probably using 6-8% as his rate these days in my opinion.
1
Posted by pbanik  (on October 16, 2014)
Trefis has calculated their price to be $79.89 as of closing Wednesday, October 16, 2014.

Wal-Mart (WMT)
http://www.trefis.com/stock/wmt/model/trefis?freeAccessToken=PROVIDER_671b8a16948d7a50a26a8fb9b86eeb6501a3d9ae

I'm guessing the calculation was done prior to this news:

eBay, Wal-Mart warnings stir holiday sales concerns
http://www.reuters.com/article/2014/10/16/us-usa-retailers-idUSKCN0I501R20141016