Wal-Mart Stores Inc. Financial Analysis

About

  • Wal-Mart was founded in 1962 by Sam Walton
  • Products include food, clothing, electronics, house and office supplies, furniture, sports and other general merchandise
  • A multi-billion dollar company and the largest retailer in the world.
  • Second largest e-commerce retailer in the world

Strengths

  • Largest retailer in the world/ Great international presence
  • ROA of 12.08%; industry average 11.40%
  • Net Profit Margin of 3.07%; industry average 2.60%
  • Opened over 800 new stores around the globe during fiscal years 2016 and 2017
  • Great organizational structure and management
  • Ability to react to situations like the decrease in sales for fiscal year 2016 with effective plans for restructuring, investing, and growth that brought sales back up in 2017
  • Consistently low prices
  • Growing net sales
  • Customer Loyalty

Weaknesses

  • A lot of outsourcing; starting to bring jobs back to U.S.
  • Failure to react to Amazon in early 2000s
  • Increasing operating expenses
  • Decreasing net income

Projections

  • Increase in net sales for 2018 and 2019
  • Continued growth of e-commerce sales
  • Increase in operating expenses for 2018 due to projected continuation of increased investments
  • Decrease in Net Income and EPS 2018
  • Decrease in shares outstanding as part of the continued share buyback plan
  • Decrease in operating expenses 2019 due to projected leveling out of investments.
  • Increase in Net Income and EPS 2019

Overall

  • Stable company with very strong performance
  • Will be around for a long time
  • Promising future of continued growth
  • Great investment: stable with steady returns
  • Wal-Mart prioritizes delivering shareholder wealth and, even more-so, every day low-prices for their customers

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