Wednesday, April 29, 2015

Analysis of Walmart 2015


Walmart, an American retail company

Company: Walmart

ISIN US9311421039 | WKN 860853 

Business: An American food and retail chain. They are using two means to reach their customers one is the retail stores and the second, fastest growing one, is via e-commerce.

Active: 27 countries world wide with retail and e-commerce is offered in 11 countries. Still heaviest represented in the USA.

P/E: 15.7

Here you can find the previous analysis of Wal-Mart
This company was analysed due to a request posted on the Analysis Requests page. 

contrarian values of P/E, P/B, ROE as well as dividend for Walmart

The P/E for Walmart is a little bit too high with 15.7 and the P/B is also slightly too high with 3.2 and we get a no go from Graham. Their earnings to sales are not very impressive with only 3% but I still consider it to be ok in the business they are in. The ROE is however excellent with 20%! The book to debt ratio is at 0.7 which is ok.
In the last five years they have had a yearly revenue growth of 2.9% which I find to be ok and this then gives us a motivated P/E of 12 to 15 which means that Walmart is today fairly valued on the market.
They pay a small dividend of 2.4% which represents 38% of their earnings so fully ok and it should be possible to keep it there with remained earnings.

Conclusion: Graham gives a no go and I keep but to wonder if this is a good moment to get a great company at a fair price? The P/E is ok, the ROE is great and the dividend is also ok. The minimum salary in the US will bring up the costs but since when have increased salary costs not been transferred to the customers? I doubt if not all the retail companies will make a price increase at the same time so one should probably not fear the minimum salary issue. I will most likely not step into Walmart but I understand if investors decide to do so.

If this analysis is outdated then you can request a new one.

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