The main objective of this study is to present the ins and outs of retail business in the world especially in the United States of America (USA) and present Walmart’s financial performance making the important valuation of the company as well as showing competitive circumstances which is essential in the eye of the financial market analyst, investors and customers.
The finding of this detailed descriptive study with sufficient financial analysis and comparative variables is that Walmart is the lucrative choice for the past, present and future investors with the estimation of terminal value at the end of the fiscal year 2026 estimated US $580 billion and the fundamental value of US $735 billion. The assumption is made on in-depth financial analysis with reliable data and calculation.
The result of this study shows that due to the emergence of stronger competitors and for being matured, Walmart is not performing as expected by investors but its gigantic market size and capital will make it capable of doing business profitably over a longer period of time. The ultimate decision given in this study for the investors is to buy. This study gives the future researcher a basis on doing further theoretical and empirical research basis on this industry leading company.
Table of Contents
SECTION-A: INTRODUCTION
SECTION-B: THEORETICAL FRAMEWORK
OVERVIEW OF RETAILING
RETAILING IN THE WORLD VS. USA
WALMART ANALYSIS: CRITICS AND PRAISE
SECTION-C: PRESENTATION OF WALMART
BRIEF HISTORY
CORPORATE PROFILE
BUSINESS DYNAMICS AND FINANCIAL TRENDS
SECTION-D: WALMART MARKET ANALYSIS
PERFORMANCE METRICS
COMPETITIVE CIRCUMSTANCES
MAJOR COMPETITORS PROFILE
Competitive Advantage
SWOT ANALYSIS OF WALMART
MICRO LEVEL ANALYSIS (PORTER´S FIVE FORCES MODEL)
Threat of substitute products and services
Threat of new entrants
Competitive rivalry within the industry
Bargaining power of customers
Bargaining power of suppliers
MARKET RISK
Currency Risk
Strategy and Competitive Forces
SECTION- E: HISTORICAL FINANCIAL DATA AND FREE CASH FLOW FORECASTS
FINANCIALS
KEY RATIOS
FREE CASH FLOW FORECASTS
PERSISTENCE AND SUSTAINABILITY OF HISTORICAL FINANCIAL DATA
SECTION-F: WALMART VALUATION AND COMPARISON
CONCEPTUAL APPROACH TO VALUATION
PERPETUAL GROWTH RATE
WEIGHTED AVERAGE COST OF CAPITAL (WACC)
Calculating Cost of Equity, Ke
Calculating Cost of Debt, Kd
Calculating Weighted Average Cost of Capital (WACC)
TERMINAL VALUE
FUNDAMENTAL VALUE
MARKET VALUE (MV)
Market Capitalization
Enterprise Value (EV)
COMPARISON
SECTION-G: ANALYSIS, RECOMMENDATION AND CONCLUSION
FUNDAMENTAL ANALYSIS AND RECOMMENDATION
CONCLUDING REMARKS
Research Objectives and Themes
The primary objective of this study is to examine the retail business landscape, with a focus on the United States, and to provide a comprehensive financial analysis and valuation of Wal-Mart Stores, Inc. The study aims to assist investors and market analysts by assessing the company's competitive environment, financial health, and future growth prospects through an in-depth fundamental analysis.
- Detailed financial performance analysis of Walmart including growth, leverage, and returns.
- Market competitiveness analysis using SWOT and Porter's Five Forces model.
- Valuation of Walmart through Discounted Cash Flow (DCF) and comparative models.
- Future growth projections and investment recommendations based on historical data.
- Evaluation of Walmart's role as a recession-resilient stock for long-term investors.
Excerpt from the Book
Walmart Analysis: Critics and Praise from Literature
Walmart’s sale was greater than the world’s next three retailers combined namely Carrefour (France), Home Depot (USA), and Metro (Germany). In the long run, Wal-Mart’s impact on local, national, and global economies will depend on the general-equilibrium responses of other firms, consumers, workers, and governments and on the strategic interactions between these players (Kmart, Target, or Costco) and Wal-Mart (Basker, 2007). The Walmart, ranked number one or two publicly traded companies in the USA and world and the world’s most important privately controlled economic institution has a range of effects resulting from the way of doing business in case of wage rates, prices, and economies on a local, national, and global scale (Fishman, 2006). Last TMT, Walmart generated US $484 billion revenue recognizing that if Walmart is a country assuming revenue equals GDP, it would be the world’s 28th largest countries in the world. In that period, Costco’s sales was US $117 billion, Target’s sales was US $74 billion, Amazon US $101 billion where only Walmart having 165% of Target, Costco and Amazon sale combined with which is not only the difference but also had highest profit margins. These 3 companies have collective capital of US $408 billion (around US $300 billion of Amazon) whereas Walmart has US $206 billion (Sure Dividend, 2016, January 29).
Summary of Chapters
SECTION-A: INTRODUCTION: This chapter provides an overview of the retail sector, justifying the choice of Walmart as the primary focus for an in-depth financial and industry analysis.
SECTION-B: THEORETICAL FRAMEWORK: This section defines the retail sector, explores global vs. USA market dynamics, and examines literature regarding criticisms and praise for Walmart's business model.
SECTION-C: PRESENTATION OF WALMART: This chapter covers the historical development of Walmart, its corporate structure, and recent business and financial trends.
SECTION-D: WALMART MARKET ANALYSIS: This part performs a deep dive into performance metrics, competitive rivalry, SWOT analysis, and micro-level analysis using Porter’s Five Forces.
SECTION- E: HISTORICAL FINANCIAL DATA AND FREE CASH FLOW FORECASTS: This section details historical financial data and provides a methodology and forecast for free cash flows.
SECTION-F: WALMART VALUATION AND COMPARISON: This chapter presents the valuation approach for Walmart, including calculations for WACC, terminal value, and fundamental value, while comparing it to peers.
SECTION-G: ANALYSIS, RECOMMENDATION AND CONCLUSION: This final chapter synthesizes the financial findings to provide an investment recommendation and concluding thoughts on Walmart's future.
Keywords
Walmart, Financial Analysis, Retail Industry, Market Analysis, Valuation, Discounted Cash Flow, WACC, Competitive Strategy, SWOT Analysis, Market Capitalization, Enterprise Value, Investment Recommendation, Sustainable Growth, Recession Stock
Frequently Asked Questions
What is the primary focus of this study?
The study focuses on conducting a comprehensive financial analysis and valuation of Wal-Mart Stores, Inc. to determine its suitability for investment.
What are the central themes of the research?
The research explores the global and US retail industry, Walmart's competitive advantages, financial performance trends, valuation methodologies, and the impact of the retail giant on its operating environment.
What is the main objective or research question?
The main objective is to evaluate the fundamental financial condition of Walmart and provide insights into its sustainability, growth prospects, and an ultimate "buy" or "sell" recommendation for investors.
Which scientific methods are employed?
The researcher uses descriptive study methods based on secondary financial and qualitative data, utilizing tools such as SWOT analysis, Porter's Five Forces, and Discounted Cash Flow (DCF) valuation models.
What topics are covered in the main section?
The main section covers the retail landscape, Walmart's history and corporate profile, competitive market analysis, historical financial performance, free cash flow forecasts, and valuation metrics.
Which keywords characterize this work?
Key terms include Walmart, financial analysis, retail industry, market analysis, valuation, Discounted Cash Flow, WACC, and competitive strategy.
How does the study approach the valuation of Walmart?
The study uses the discounted cash flow (DCF) model based on the Harvard professor Williams valuation model, incorporating WACC and perpetual growth rates to estimate the fundamental value.
What conclusion does the author reach regarding investing in Walmart?
The author concludes that Walmart is a lucrative choice for investors, citing its gigantic market size, capital strength, and potential for profitability over the long term, ultimately recommending the stock as a "buy."
- Citar trabajo
- Samsul Alam (Autor), 2016, Retail Business Organization. Financial Performance and Valuation of “Walmart” in the USA, Múnich, GRIN Verlag, https://www.grin.com/document/916809
