Wal-Mart Stores, Inc. (WMT)
- 51.79 (USD)
(+0.1 %)
9/3/2010 11:23:00 AM
WMT Stock Report
NYSE:
WMT
51.79
(USD)
(0.1 %
)
09/03 11:23 AM
Open
51.86
Day's Range
51.65
-
52.09
52Wk Range
48.01 - 56.27
Mkt Cap
189.2 Billion
Vol/Avg
3387256/13.6 Million
Div/Yield
2.20%
Key Fundamentals
| Price (11:23 AM) | 51.79 |
|---|---|
| Volume (11:23 AM) | 3387256 |
| Last Close Price | 51.79 |
| 10 Day Average Volume | 13.6 Million |
| 13 Week Price Range | 48.01 - 52.08 |
| 52 Week Price Range | 48.01 - 56.27 |
| LTM Revenue | 413.8 Billion |
| Shares Outstanding (1/31/2010) | 3.7 Billion |
| Market Capitalization | 189.2 Billion |
| Shares Held By Institutions | 148.2 Million |
| Institutional Holders | 2,026 |
| % Shares Held By Institutions | 38.31% |
| Earnings Per Share (EPS) | 3.71 |
| P/E Ratio | 12.837 |
| Book Value Per Share | 17.4264 |
| Gross Margin | 25.34% |
| Annual Dividend | 1.12 |
| Dividend Yield | 2.20% |
| Beta | 0.277721 |
| Fiscal Year Ends | January |
About Wal-Mart Stores, Inc.
Wal-Mart Stores, Inc.is considered to operate in the Consumer Services sector. They specifically operate in the Discount Stores business segment contained within the Retail - Discount Stores industry.
Wal-Mart Stores, Inc. was incorporated in Delaware in October 1969. The Company operates Walmart discount stores, supercenters, Neighborhood Markets and Sam's Club locations in the United States. The Company's operations comprise three business segments: Walmart U.S., International and Sam's Club. The Company's Walmart U.S. segment operates stores in three different formats in the United States, as well as Wal-Mart's online retail operations, walmart.com. The Company's Walmart U.S. retail formats include: Discount stores, which average approximately 108,000 square feet in size and offer a assortment of general merchandise and a limited variety of food products; Supercenters, which average approximately 186,000 square feet in size and offer an assortment of general merchandise and a full-line supermarket; and Neighborhood Markets, which average approximately 42,000 square feet in size and offer a full-line supermarket and a limited assortment of general merchandise. The Walmart U.S. segment also offers financial services and products, including money orders, wire transfers, check cashing and bill payment. The Company's Sam's Club segment consists of membership warehouse clubs in the United States and the segment's online retail operations, samsclub.com. The Company's Sam's Clubs average approximately 133,000 square feet in size. Sam's Club offers bulk displays of brand name merchandise, including hardgoods, some softgoods, institutional-size grocery items, and selected private-label items under the "MEMBER'S MARK," "BAKERS & CHEFS" and "SAM'S CLUB" brands in five categories, listed below, within the warehouse club format. The International segment includes numerous different formats of retail stores and restaurants, including discount stores, supercenters and Sam's Clubs that operate outside the United States. The Company's International segment is comprised of its wholly-owned subsidiaries operating in Argentina, Brazil, Canada, Japan, Puerto Rico and the United Kingdom, its majority-owned subsidiaries operating in five countries in Central America, and in Chile and Mexico, its joint ventures in India and China and its other controlled subsidiaries in China. It also markets lines of merchandise under its private-label store brands including 'Great Value,' 'Equate,' 'Ol' Roy,' 'Sam's Choice,' 'Spring Valley,' 'Parent's Choice,' 'Everstart,' 'Faded Glory,' 'No Boundaries,' 'George,' 'Athletic Works,' 'Secret Treasures,' 'Puritan,' 'Durabrand,' 'HomeTrends,' 'Mainstays,' 'Ozark Trail,' 'White Stag' and 'Canopy.' The Company also markets lines of merchandise under licensed brands, some of which include 'General Electric,' 'Disney,' 'McDonald's,' 'Better Homes & Gardens,' 'OP,' 'Starter,' 'Danskin Now' and 'Just My Size.' Sam's Club competes with other retailers and warehouse clubs for desirable new club sites. The International segment competes with a variety of local, national and international chains in the supermarket, discount, department, drug, variety and specialty stores, supercenter-type stores, hypermarts, wholesale clubs, internet-based retailers and catalog businesses. The Company's discount stores compete with other discount, department, drug, variety and specialty stores and supermarkets, many of which are national or regional chains. It works in compliance with applicable laws and regulations.
WMT Stock Evaluation
Looking at WMT since last week, there has been little movement in price on a percentage basis. Additionally, there haven't been significant revisions to earnings estimates for WMT. Given this, we are maintaining our Undervalued rating. While there may not have been any meaningful changes in either price or earnings outlook, we still want to analyze where WMT is in relationship to its historical fundamentals. Looking at the ratios and multiples described below and throughout this report is the best way to evaluate the strength of WMT's current Undervalued rating.
Recommendation Summary
At Ockham Research, we are always interested in understanding a company from a valuation standpoint, but even the most ardent value investor understands that there is more to the picture than simply valuation. So, we also apply a volatility studies for both the index and individual sectors. We utilize these tools in order to get a more complete picture of the investing environment. So, while most of our report highlights current valuation versus historical norms as well as peer analysis, there is still more going on behind the scenes.
Ockham Research is reaffirming our rating on WMT this week although we believe that this stock has become more intriguing based on the underlying fundamentals at this price level. Overall, the NYSE has been relatively stable over the last few months, or at least, the performance of the market has not crossed a major volatility standard deviation over the last twelve months. For a detailed analysis of this stock please read the following report.
First, WMT increased in price by 0.16% since 08/14/2010 and this does not greatly impact our outlook.
Second, since our last report, there have been no significant adjustments in earnings expectations or guidance.
WMT Revenue
Cash earnings is the most important factor in our analysis, but it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, WMT the high and low end of the Price to Sales per share ratios are 0.68x and 0.54x respectively.
Notice that WMT's current Price to Sales per share ratio is 0.46x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of 50.22, WMT is 25% below where we would expect to see it. This will beneficially factor into our final analysis of WMT as it is not often that this stock sinks to these levels.
WMT Cash Earnings
As the old saying goes, "Cash is King!" We look at reported Cash Earnings, but the main emphasis of our analysis involves stripping out non-cash events such as depreciation from our cash earnings analysis. This helps us view the cash flows more clearly. Nevertheless, an analysis of Cash Earnings (both reported and otherwise) is absolutely pivotal to assessing a company's value, and currently WMT is significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for WMT, the current level of Cash Earnings compared to its historical levels helps identify where WMT is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 19.68 and a historical low Cash Earnings per share ratio of 15.40, an investor can relate where value becomes optimal.
So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for WMT? From the Ockham perspective, we are looking specifically at WMT to see if the market is recognizing the huge disparity between WMT's past stock price to Cash Earnings ratio to today's levels. At a difference of 30% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at WMT. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.
WMT Dividends
When determining a company's future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn't imperative for WMT to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis.
The estimated annual dividend for WMT is 1.12 producing a current dividend yield of 2.19%. Much like our evaluation of Sales and Cash Earnings per share, we review dividend yields from WMT against the historic high and low levels over all available dividend history. Because dividends are a decision made exclusively by management, we view a healthy and rising dividend as a sign of confidence and strength. The highest dividend yield from WMT over previous years was 2.36% while the lowest dividend yield was 0.47%. If you are looking for some “bang for your buck” then a dividend yield of 55.13% above the historical median should be enticing. WMT receives a positive boost in our view because as you know, equity at its core is simply a claim on future dividends.