Walmart Inc. (WMT) Stock Analysis
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Introduction
Walmart Inc. is a global retail giant that operates a chain of supermarkets, discount department stores, and grocery stores. Established in 1945 and headquartered in Bentonville, Arkansas, Walmart has expanded far beyond its origins to become a worldwide entity known for its commitment to offering low prices and a wide range of products.
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The company is divided into three main segments: Walmart U.S., Walmart International, and Sam’s Club. It’s a retail powerhouse that includes supercenters, supermarkets, hypermarkets, warehouse clubs, cash-and-carry stores, and discount stores, operating under various brands including the flagship Walmart, as well as Walmart Neighborhood Market and Sam’s Club.
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A hallmark of Walmart’s approach is the operation of a sizable e-commerce platform, which includes a range of websites and mobile commerce applications. The company also maintains a robust private brand portfolio with names like Equate, Mainstays, and Great Value among others.
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On the financial side, Walmart’s strategy has allowed it to continue expanding and maintaining a strong market presence, with a clear focus on maximizing efficiency and keeping prices competitive for consumers. Its large scale and dominance in the retail space are a testament to its successful blend of in-store and digital retail strategies.
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 Walmart Inc. (WMT) Stock Analysis
Walmart Inc. (WMT), the retail behemoth known for its superstores, hypermarkets, and discount department stores, holds a significant place in the global retail landscape. With a market capitalization of $490.49 billion as of the trailing twelve months (ttm), it continues to show its prowess in the retail sector.
Walmart’s revenue growth over the years reflects a consistent upward trajectory, a testament to its expansive reach and operational efficiency. The reported revenue of $648.13 billion and a net income of $15.51 billion in the ttm indicate a robust profit-making ability despite the tight margins typical in the retail industry. The earnings per share (EPS) of $1.91, coupled with a price-to-earnings (PE) ratio of 31.87, suggest that investors are willing to pay a premium for Walmart’s stock, which is likely due to its established market position and perceived stability.
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The forward PE of 26.74 provides an optimistic outlook, implying expected growth in earnings. Walmart’s dividends remain attractive with a yield of 1.36%, signaling a commitment to returning value to shareholders. Its ex-dividend date set for December 13, 2024, ensures that investors have clarity on their dividend planning.
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Walmart’s stock price demonstrates resilience and growth, with a 52-week range of $46.87 – $61.66 and an increase of +30.88% over the last year. This performance is particularly noteworthy given the beta of 0.50, indicating less volatility compared to the broader market, which might appeal to risk-averse investors.
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From a liquidity standpoint, Walmart’s current ratio of 0.83 suggests that the company can cover its short-term liabilities, although the quick ratio of 0.20 points to a heavier reliance on inventory to do so. This is not unusual for a large retailer, but it does necessitate efficient inventory turnover, which Walmart appears to manage well, given its turnover rate of 8.79.
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Operationally, Walmart exhibits sound financial efficiency with a return on equity (ROE) of 19.70%, return on assets (ROA) of 6.10%, and return on invested capital (ROIC) of 13.68%. These figures demonstrate Walmart’s ability to generate profits from its investments and assets effectively.
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The company’s EBITDA of $35.63 billion further underlines its operational profitability, and the EBITDA margin of 5.50% is healthy for the retail industry. The operating cash flow of $35.73 billion and a sizeable free cash flow (FCF) of $15.37 billion underscore Walmart’s financial health, allowing it to invest in growth opportunities, service debt, and return capital to shareholders.
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Walmart’s debt position, with total debt at $61.32 billion, is notable. However, with an enterprise value (EV) of $541.95 billion, the debt level appears manageable. The debt-to-EBITDA ratio of 1.72 indicates that Walmart is not excessively leveraged and should be able to service its debt from its earnings before interest, taxes, depreciation, and amortization.
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The forward-looking valuation ratios, including the EV/EBITDA ratio of 15.21 and the EV/FCF ratio of 35.26, present Walmart as a company with solid future earnings potential relative to its enterprise value.
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In summary, Walmart Inc. stands as a retail colossus with a proven track record of growth, profitability, and shareholder returns. While the retail sector faces various challenges, including competition from e-commerce platforms and fluctuating consumer spending patterns, Walmart’s scale, diversified product offerings, and investment in digital transformation position it to continue its role as a leading player in the global retail market.
Disclaimer
This analysis is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult with a financial advisor before making investment decisions.