Walmart analysis

A current business on the fortune 500 list is Wal-Mart. According to www.reuters.com (n. d.), Wal-Mart’s corporate headquarters is located on 702 S.W. Eighth Street in Bentonville, AR. According to www.corporate.walmart.com (n. d.), Wal-Mart operates more than 11,000 retail units under 69 banners in 27 countries and e-commerce websites in 10 countries. Each week, Wal-Mart has more than 245 million customers (www.corporate.walmart.com, n. d.). Wal-Mart employs 2.2 millionassociates around the world and 1.3 million in the United States alone (www.corporate.walmart.com, n. d.). In 2013, Wal-Mart ranked number one in the fortune 500 list with revenue of $469,162,000, according to www.financials.morningstar.com (n. d.).

On July 2, 1962, Sam Walton opened the first Walmart store in Rodgers, Arkansas (www.corporate.walmart.com, n. d.). Sam Walton’s strategy was built on an unshakeable foundational belief of The Lowest Price Anytime, Anywhere (www.corporate.walmart.com, n. d.). By 1967, the Walton family owned 24 stores, ringing up $12.7 million in sales (www.corporate.walmart.com, n. d.). In the 1970s, following a decade of incredible growth, “Mr. Sam” began to take Walmart national, thereby, proving his vision’s widespread appeal (www.corporate.walmart.com, n. d.). In the 1980s, the first Sam’s Club opened, to serve small businesses and individuals while the first Walmart Supercenter opened, which combined a supermarket with general merchandise (www.corporate.walmart.com, n. d.).

By 1990, Walmart was the nation’s number one retailer and expanded international (www.corporate.walmart.com, n. d.). Wal-Mart is in the retail industry. According to www.retailindustry.about.com (n. d.), the U.S. is the market leader of the retail industry when measured solely by revenue numbers.

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As such, 81 of the largest companies of any type in the world are U.S. based companies (www.retailindustry.about.com, n. d.). According to www.stores.org (n. d.), the major competitors for Wal-Mart include Kroger, Target, Costco, The Home Depot, Walgreens, CVS Caremark, and Lowe’s. By comparison, Wal-Mart is way out in front of the competition ranking number one for top retail companies with $328,704,000 U.S. retail sales in 2012 (www.stores.org, n. d.). Kroger is ranked number 2 with only $92,165,000 U.S. retail sales in 2012 (www.stores.org, n. d.).

Target is third on the list with $71,960,000 U.S. retail sales (www.stores.org, n. d.). Wal-Mart is not only the largest global retailer; it is also one of the largest companies of any kind in the world (www.retailindustry.about.com, n. d.). Wal-Mart’s mission is to save people money in order for them to live better (www.corporate.walmart.com, n. d.). Everyday low pricing is the company’s pricing philosophy (www.corporate.walmart.com, n. d.). Walmart believes that through innovation, they are creating a seamless experience to let customers shop anytime and anywhere online, through mobile devices and in stores (www.corporate.walmart.com, n. d.).

They are creating opportunities and brining value to customers and communities around the globe (www.corporate.walmart.com, n. d.). Innovative thinking, leadership through service, and above all, Wal-Mart’s commitment to save people money so they can live better have made Wal-Mart the business they are today (www.corporate.walmart.com, n. d.). According to www.ehow.com (n. d.), Wal-Mart offers a variety of services, including retail goods, 1 / 4 pharmacy, financial, wireless and photo lab services.

Retail goods include electronics, music downloads, movies, books, jewelry, home furnishing, baby products, sporting goods, and groceries (www.ehow.com, n. d.). For photo services at Wal-Mart, customers can WAL-MART 4 drop off their photographs for developing via a store kiosk and customers can also upload their digital photos via the corporate website (www.ehow.com, n. d.). Wal-Mart offers monthly prescriptions for pickup in-store or mail order services for long-term medications (www.ehow.com, n. d.).

Walmart offers several financial services including credit cards, debit cards, bill payment, money transfers, check cashing and check printing (www.ehow.com, n. d.). Wal-Mart has teamed up with T-Mobile to offer wireless phone services such as the Walmart Family Talk Wireless service, which provides customers with a family plan for unlimited text and voice calls (www.ehow.com, n. d.). According to www.images.businessweek.com (n. d.), Wal-Mart sold more bananas than any other single item in 2010.

Wal-Mart operates in three segments. Those segments include Walmart U.S., Walmart International, and Sam’s Club (www.reuters.com, n. d.). The Walmart U.S. segment operates retail stores in all 50 states and Puerto Rico (www.reuters.com, n. d.). Net sales surpassed $274 billion, which was a 3.9% increase from fiscal 2012 (www.corporate.walmart.com, n. d.). Operating income grew to $21.5 billion as well (www.corporate.walmart.com, n. d.).

Walmart International operates units in three categories: retail, wholesale, and other (www.reuters.com, n. d.). These categories consist of numerous formats, including discount stores, supermarkets, supercenters, hypermarkets, retail websites, warehouse clubs, restaurants and apparel stores (www.reuters.com, n. d.). Net sales surpassed $135 billion, which was a 7.4% increase from fiscal 2012 (www.corporate.walmart.com, n. d.). Its operating income grew to $6.7 billion (www.corporate.walmart.com, n. d.).

Sam’s Clubs are membership only operations. Members include both business owners and individual consumers (www.reuters.com, n. d.). Net sales surpassed $56 billion with a 4.9% WAL-MART 5increase from fiscal 2012 and its operating income grew to $2.0 billion (www.corporate.walmart.com, n. d.).

Investment Analysis

According to www.stock-analysis-on.net (n. d.), Wal-Mart generated $466,114 million in sales for 2013 (p. 1). From those sales, the site reports that Wal-Mart generated a net income of $113,626 for the same period. Furthermore, this site reports that Wal-Mart had $203,105 million in assets and generated $76,343 million in shareholder’s equity. From these numbers, Wal-Mart had a profit margin of 24.38% for 2013. During this same period, Wal-Mart had a return on assets of 8.37% and a return on equity of 22.27%.

According to www.stock-analysis-on.net (n. d.), Wal-Mart generated $466,114 million in sales for 2013 (p. 1). This site also reports that Wal-Mart had fixed assets totaling $116,681 million and $203,105 million in total assets during the same period. From these numbers, Wal-Mart had a fixed asset turnover of 2.29 and a total asset turnover of 3.99 in 2013.

According to www.stock-analysis-on.net (n. d.), Wal-Mart had $59,940 million in current assets for 2013 (p. 1). This site also reports that Wal-Mart had current liabilities totaling $71,818 million and an inventory totaling $14,549 million for the same period. From these numbers, Wal-Mart had a current ratio of 0.83 and a quick ratio of 0.20 in the year of 2013. According to www.stock-analysis-on.net (n. d.), Wal-Mart had a total debt of $54,136 million in 2013 (p. 1).

This site also reports that Wal-Mart had total assets of $203,105 million, $27,988 million in income before interest and taxes, and $2,251 million in interest expenses during the same period. In the same year, Wal-Mart also had an income before fixed charges and taxes of $30,239 million and fixed charges totaling $981 million, according to the same source.

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From these numbers, Wal-Mart had a debt to total assets ratio of 0.27, times interest earned ratio of 12.43, and a fixed charge coverage ratio of 30.82. Chapter 2: Stock and Bond Values  According to www.reuters.com (n. d.), Wal-Mart has 3.23 billion shares of common stock outstanding (p. 1). This site reports the value of its common stocks at $76.43 per share. According to www.finance.yahoo.com (n. d.), the common stock’s net worth is $23.59 per share (p. 1). In addition to its common stock, Wal-Mart has zero shares of preferred stock outstanding (www.reuters.com, n. d.). Wal-Mart does not finance through preferred stocks.

Therefore, the value of Wal-Mart’s preferred stock is also zero. According to www.quicktake.morningstar.com (n. d.), Wal-Mart issued a $1,000 par value bond (p. 1). This site reports that the bond pays 5.375 percent interest with 3 years to maturity. Based on these numbers, the bond’s current present value is $134.50. Chapter 3: Company Earnings According to www.nasdaq.com (2012), Wal-Mart’s common stock is currently priced at $77.66 per share (p. 1). This site reports that the company currently has 3,389,000,000 shares outstanding.

These shares paid out $5,388,510,000 in dividends in 2012 to 1,459 common stockholders. From these numbers, it has been determined that Wal-Mart’s earning per share is $4.52. Wal-Mart’s common stock generated earnings per share of $4.52 for 2012. According to www.nasdaq.com (2012), the company’s common stock is priced at $77.66 per share (p. 1). From this data, it has been determined that the company’s price-earnings ratio is 15.47.

As such, WAL-MART 7 this number indicates that the company’s common stock is worth 15.47 times more than its earnings in the market. According to www.nasdaq.com (2012), Wal-Mart generated $16,699,000,000 in net income (p. 1). During this period, the site reports that the company incurred $126,762,000,000 in debt while possessing $203,105,000,000 in assets. From these numbers, it has been determined that Wal- Mart’s return on equity is 0.2227. Furthermore, from this data, the company paid out a total of $5,388,510,000 in dividend income for 2012.

Chapter 4: Conclusion Wal-Mart is a current business on the fortune 500 list. Wal-Mart offers a variety of services and goods including retail goods, pharmacy, financial, wireless, and photo lab services (www.ehow.com, n. d.). Wal-Mart competes in the retail industry against other retail competitors such as Target, Costco, and The Home Depot (www.stores.org, n. d.). Wal-Mart is the top retail company in the world (www.stores.org, n. d.). The value of Wal-Mart’s common stock in 2012 was $77.66 per share and the company offers $1,000 par value bonds (www.nasdaq.com, 2012.). In 2012, Wal-Mart’s earnings per share were $4.52.

After researching Wal-Mart as an investor, it is now time to decide whether or not to invest in the fortune 500 company. In 2013, Wal-Mart generated $466,114 million in sales and generated a net income of $113,626 for the same period (www.stock-analysis-on.net, n. d.). This gave Wal-Mart a profit margin of 24.38% for 2013. Wal-Mart’s return on assets for 2013 was 8.37% and its return on equity was 22.27%. These are all good indicator  that Wal-Mart is a profitable company. In 2012, Wal-Mart had a price earnings ratio of 15.47, which indicates that the company’s common stock is worth 15.47 times more than its earnings in the market.

All of WAL-MART 8 these numbers look good for an investor but there is a lack of findings in the research to determine if Wal-Mart is a good investment. An investor would have to look at older profit ratios and earnings for the company to compare them. From there, the investor can make the decision if he or she wants to make the investment. It is not a wise choice for an investor to make an investment on a company just from looking at one year of data.

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References

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284690300407249347&oid=223073.1&affillinktype=10&veh=affwww.ehow.com. (n.

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