WMT  Wal-mart Stores Inc.

Exchange

NYSE

Sector

Consumer Services

Industry

Department/Specialty Retail Stores

Market Cap.

221.88B

Vuru Grade

38.38/100

Current Price

$72.39
+1.08 (+1.51%)

Growth Price

$76.19
Undervalued by 5.24%

Company Metrics

  • P/E 16.53
  • P/S 0.45
  • P/B 2.81
  • EPS 4.38
  • Cash ROIC 10.42%
  • Cash Ratio 0.13
  • Dividend 2.04 / 2.86%
  • Avg. Vol. 8.95M
  • Shares 3.07B
  • Market Cap. 221.88B

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.: Don't Rule Out This Company
Seeking Alpha - Feb 22, 2017
WMT released its Q4 and FY2017 results February 21, 2017 and reported $4.38 Diluted EPS from continuing operations. Total revenue of $485.9B increased 0.8%, or 3.1% to $496.9B if currency adjustments are excluded.
Drop Wal-Mart Stores Inc (WMT) Stock Before It Drops You - Investorplace.com
Wal-Mart Stock Will Rise Again
Seeking Alpha - Feb 24, 2017
Wal-Mart, which earned $13.5 billion in 2008, is only expected to earn $13.5 billion this year. Perhaps most distressing is that the store count increased from 7720 in 2008 to almost 12000 now and Wal-Mart couldn't get any extra net profits out of it.
Warren Buffett's 4Q Biggest Trades: Apple Inc. (AAPL), Wal-Mart Stores Inc (WMT) - Smarter Analyst
Wal-Mart Stores Inc. (WMT) Closes 1.51% Up on the Day for February 24 - Equities.com
Warren Buffett sells millions in Wal-Mart Stores Inc stock
AOL Small Business - Feb 15, 2017
Warren Buffett's Berkshire Hathaway (ticker: BRK.A, BRK.B) shed $900 million in Wal-Mart Stores Inc (WMT) stock, reports Business Insider, echoing larger issues the retail industry is facing against fierce competition like Amazon.
Wal-Mart Stores Inc (WMT) Stock Isn't Coming Back. Just Ask Buffett. - Investorplace.com
Wal-Mart Stores Inc. (WMT) Closes 0.73% Up on the Day for February 17 - Equities.com
Wal-Mart Stores Inc. (WMT) Closes 1.31% Up on the Day for February 14
Equities.com - Feb 14, 2017
Shares of Wal-Mart Stores Inc. (WMT) ended the trading day Tuesday at $68.66, representing a move of 1.31%, or $0.89 per share, on volume of 8.34 million shares.
Exclusive: Wal-Mart to tear down walls between store, online buying operations ... - Reuters
Impact of Brokerage Rating on Wal-Mart Stores, Inc.(WMT) - Highland Mirror
Here's Why Warren Buffett Dumping His Walmart Holdings Was A Mistake
ETF Daily News (blog) - Feb 23, 2017
Recent financial results point to Wal-Mart successfully adapting to e-commerce retailing while continuing to dominate brick-and-mortar retailing.
Wal-Mart Stores Inc. (WMT) Closes 0.74% Up on the Day for February 07
Equities.com - Feb 7, 2017
Shares of Wal-Mart Stores Inc. (WMT) ended the trading day Tuesday at $66.89, representing a move of 0.74%, or $0.49 per share, on volume of 5.79 million shares.
Wal-Mart Stores Inc 13% Potential Upside Now Implied by Bernstein - DirectorsTalk Interviews
200 jobs offered at Whitehall Township Wal-Mart store - WZZM13.com
Wal-Mart Stores Inc. (WMT) Moves Lower on Volume Spike for January 27
Equities.com - Jan 27, 2017
Wal-Mart Stores Inc. (WMT) traded on unusually high volume on Jan. 27, as the stock lost 1.6% to close at $65.66. On the day, Wal-Mart Stores Inc. saw 13.35 million shares trade hands on 73,893 trades. Considering that the stock averages only a daily ...
Thomas Kee looks at Wal-Mart Stores Inc (NYSE:WMT) - Stock Traders Daily
Wal-Mart Stores, Inc. (WMT) Shares Sold by Diversified Trust Co - Sports Perspectives
Price targets on Wal-Mart imply more upside
Seeking Alpha - Feb 21, 2017
The general sense is that the company's e-commerce business is gaining momentum and that it's riding out the broad pressures on the retail sector despite the immense scale of the Wal-Mart business. Firms such as Robert Baird ($80 PT), MKM Partners ($72 ...
Wal-Mart Stores Inc. (WMT) Moves Lower on Volume Spike for February 10
Equities.com - Feb 10, 2017
Wal-Mart Stores Inc. (WMT) traded on unusually high volume on Feb. 10, as the stock lost 1.53% to close at $68.02. On the day, Wal-Mart Stores Inc. saw 12.35 million shares trade hands on 75,755 trades. Considering that the stock averages only a daily ...
New Wal-Mart to include first Chobani Cafe outside of NYC, high-tech shopping - Houston Business Journal
Wal-Mart Stores Becomes #6 Most Shorted Dow Stock, Replacing Procter & Gamble - Forbes
Warren Buffett Just Ditched His Stock in Wal-Mart
US News Money - Feb 15, 2017
The billionaire investor has practically zero shares left in the legacy retailer Wal-Mart, which has a market cap of $298 billion.
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.

$72.39 Current Price

$76.19 Growth Price (DCF)

Undervalued by 5.24%


Growth Rate Assumed by Market: 8.10%


Future Free Cash Flow Growth Rate: 10.0%


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 $10.42 of cash for every $100 invested.
Figures in USD. Fiscal year ends in January
20122013201420152016
Free Cash Flow 10.75B 12.69B 10.14B 16.39B 15.91B
divided by
Invested Capital 124.56B 123.51B 128.13B 129.30B 126.26B
Cash ROIC 8.63% 10.28% 7.92% 12.68% 12.60%

Excellent Return on Equity over the past 5 years

Over the past 5 years, WMT has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

WMT has generated $17.83 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in January
20122013201420152016
Net Income 16.39B 17.76B 16.70B 17.10B -
divided by
Stockholders' Equity 71.32B 76.34B 76.26B 81.39B 80.55B
Return on Equity 22.98% 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
2007200820092010201120122013201420152016
Free Cash Flow 4.50B 5.42B 11.65B 14.07B 10.94B 10.75B 12.69B 10.14B 16.39B 15.91B

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
2007200820092010201120122013201420152016
Cash 7.37B 5.57B 7.28B 7.91B 7.40B 6.55B 7.78B 7.28B 9.14B 8.71B
Current Assets 46.59B 47.59B 48.95B 48.33B 51.89B 54.98B 59.94B 61.19B 63.28B 60.24B
Total Assets 151.19B 163.51B 163.43B 170.71B 180.66B 193.41B 203.11B 204.75B 203.71B 199.58B
Current Liabilities 51.75B 58.45B 55.39B 55.56B 58.48B 62.30B 71.82B 69.35B 65.27B 64.62B
Total Liabilities 89.62B 98.91B 98.14B 99.96B 112.12B 122.09B 126.76B 128.50B 122.31B 119.04B
Stockholder' Equity 61.57B 64.61B 65.29B 70.75B 68.54B 71.32B 76.34B 76.26B 81.39B 80.55B
Current Ratio 0.90 0.81 0.88 0.87 0.89 0.88 0.83 0.88 0.97 0.93
TL-to-TA 0.59 0.60 0.60 0.59 0.62 0.63 0.62 0.63 0.60 0.60

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
2007200820092010201120122013201420152016
Retained Earnings 55.82B 57.32B 63.66B 66.64B 63.97B 68.69B 72.98B 76.57B 85.78B 90.02B
Retained Earnings Growth - 2.69% 11.06% 4.68% -4.01% 7.39% 6.24% 4.92% 12.03% 4.95%

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 $3.20 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in January
2007200820092010201120122013201420152016
Net Income 11.28B 12.73B 13.40B 14.85B 16.99B 16.39B 17.76B 16.70B 17.10B -
divided by
Revenue 348.65B 378.80B 405.61B 408.21B 421.85B 446.95B 469.16B 476.29B 485.65B -
Net Profit Margin 3.24% 3.36% 3.30% 3.64% 4.03% 3.67% 3.78% 3.51% 3.52% -

Shrinking Pricing Power over the past 10 years

WMT has shrinking gross margins, suggesting that they are no longer able to set prices without consideration of the cost of goods sold. As gross margins shrink, WMT's flexibility to weather inflationary enviroments will diminish, which weakens their overall economic moat. Look at its future prospects to determine sustainability and whether the economic moat will continue to shrink or if it will rebound.

$22.33 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
2007200820092010201120122013201420152016
Gross Profit 84.50B 92.28B 99.45B 103.56B 106.56B 111.82B 116.67B 118.23B 120.57B -
divided by
Revenue 348.65B 378.80B 405.61B 408.21B 421.85B 446.95B 469.16B 476.29B 485.65B -
Gross Margin 24.24% 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.

89.29% 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
2007200820092010201120122013201420152016
Capital Expenditure 15.67B 14.94B 11.50B 12.18B 12.70B 13.51B 12.90B 13.12B 12.17B 11.48B
divided by
Net Income 11.28B 12.73B 13.40B 14.85B 16.99B 16.39B 17.76B 16.70B 17.10B -
Capital Expenditure Ratio 138.83% 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
2007200820092010201120122013201420152016
Dividend Paid 2.80B 3.59B 3.75B 4.22B 4.44B 5.05B 5.36B 6.86B 6.79B 7.01B
divided by
Shares Outstanding 4.17B 4.07B 3.95B 3.88B 3.67B 3.47B 3.39B 3.28B 3.24B -
Dividend Paid Per Share 0.67 0.88 0.95 1.09 1.21 1.45 1.58 2.09 2.09 -
Price at Year End 44.00 51.26 51.66 52.63 59.76 67.61 78.63 86.79 61.68 69.12
Dividend Yield 1.53% 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
2007200820092010201120122013201420152016
Shares Outstanding 4.17B 4.07B 3.95B 3.88B 3.67B 3.47B 3.39B 3.28B 3.24B -
Stock Bought Back - 2.36% 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