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Category: Walmart (WMT) and Target (TGT)
Date: 24 November 2020 Stock price of Walmart (WMT): $150.93 Stock price of Target (TGT): $177.56 In our continued stock face of series we compare the stocks of two of the world's largest retailers, Walmart (WMT) vs Target (TGT). Which stock has been the best performer in recent years and based on their financial results which one has the most potential to outperform in future.
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Looking at all the fundamental metrics above Walmart wins on the Price/Stockholders equity per share metric, but loses out on the cash as percentage of stock price, where Target is the winner. Target also has the stronger cash position with their cash as percentage of total assets being higher than that of Walmart. When looking at the PE ratio it is Walmart that has the lower PE ratio. Walmart is trading at a very slight discount to our latest stock valuation of the group, while Target is trading at about 9% above our latest stock valuation (target price) for the group "
More About Walmart (WMT)
What started small, with a single discount store and the simple idea of selling more for less, has grown over the last 50 years into the largest retailer in the world. Each week, nearly 265 million customers and members visit our more than 11,200 stores under 55 banners in 27 countries and eCommerce websites in 10 countries. With fiscal year 2018 revenue of $500.3 billion, Walmart employs over 2.2 million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy and employment opportunity. It’s all part of our unwavering commitment to creating opportunities and bringing value to customers and communities around the world.
From our humble beginnings as a small discount retailer in Rogers, Ark., Walmart has opened thousands of stores in the U.S. and expanded internationally. Through innovation, we're creating a seamless experience to let customers shop anytime and anywhere online, through mobile devices and in stores. We are creating opportunities and bringing value to customers and communities around the globe. Walmart operates over 11,200 stores under 55 banners in 27 countries and eCommerce websites in 10 countries. We employ approximately 2.2 million associates around the world — 1.5 million in the U.S. alone.
Around the world, we help families save money so they can live better. We use our size and scale to provide access to high-quality goods and fresh, nutritious food at everyday low prices—while creating opportunities for our associates and small and medium-sized global suppliers. Led by President & CEO Judith McKenna, Walmart International has more than 5,900 retail units, operating outside the United States with 55 banners in 26 countries with more than 700,000 associates serving more than 100 million customers every week.
Overview of the latest quarterly earnings report of Walmart (WMT)
Our latest stock valuation of Walmart (WMT): $151.20
From our humble beginnings as a small discount retailer in Rogers, Ark., Walmart has opened thousands of stores in the U.S. and expanded internationally. Through innovation, we're creating a seamless experience to let customers shop anytime and anywhere online, through mobile devices and in stores. We are creating opportunities and bringing value to customers and communities around the globe. Walmart operates over 11,200 stores under 55 banners in 27 countries and eCommerce websites in 10 countries. We employ approximately 2.2 million associates around the world — 1.5 million in the U.S. alone.
Around the world, we help families save money so they can live better. We use our size and scale to provide access to high-quality goods and fresh, nutritious food at everyday low prices—while creating opportunities for our associates and small and medium-sized global suppliers. Led by President & CEO Judith McKenna, Walmart International has more than 5,900 retail units, operating outside the United States with 55 banners in 26 countries with more than 700,000 associates serving more than 100 million customers every week.
Overview of the latest quarterly earnings report of Walmart (WMT)
- Revenue: $134.7 billion (up from $127.9 billion for the same quarter of the previous year)
- Revenue increased by 5.2% over the last 12 months
- Cost of sales: $100.4 billion (up from $95.9 billion for the same quarter of the previous year)
- Cost of sales increased by 4.6% over the last 12 months.
- Margin gain for Walmart as the group's revenues increased at a faster rate than their cost of sales
- Net income: $5.135 billion (up from $3.288 billion for the same quarter of the previous year)
- Diluted income per share: $1.80 (up from $1.15 for the same quarter of the previous year)
- PE ratio of Walmart: 20.7
- Diluted income per share: $1.80 (up from $1.15 for the same quarter of the previous year)
- Diluted weighted number of shares outstanding: 2.849 billion (down from 2.861 billion for the same quarter of the previous year)
- Cash and cash equivalents: $14.325 billion
- Cash and cash equivalents per share: $5.02
- Cash and cash equivalents makes up 3.3% of Walmart's market capital
- Cash and cash equivalents makes up 5.7% of Walmart's total assets
- Cash and cash equivalents per share: $5.02
- Receivables, net: $5.770 billion
- Receivables makes up 2.3% of Walmart's total assets
- Inventories: $51.8 billion
- Inventories makes up 20.6% of Walmart's total assets
- Walmart's inventories grew by 0.57% over the last 12 months
- Stockholders equity in Walmart: $87.504 billion
- Stockholders equity per share in Walmart: $30.71
- So Walmart is trading at 4.9 times its stockholders equity per share which is just outside the expected range of between 2 and 4 times that most firms tend to trade at
- For some perspective the average price to book value of firms in the S&P 500 is 3.9
- Stockholders equity in Walmart: $87.504 billion
- Cash generated from operations for 9 months: $22.8 billion
- Cash generated from operations per share for 9 months: $8.002
Our latest stock valuation of Walmart (WMT): $151.20
More About Target (TGT)
Target Corporation (Target, the Corporation or the Company) was incorporated in Minnesota in 1902. We offer to our customers, referred to as "guests," everyday essentials and fashionable, differentiated merchandise at discounted prices. Our ability to deliver a preferred shopping experience to our guests is supported by our supply chain and technology, our devotion to innovation, our loyalty offerings and suite of fulfillment options, and our disciplined approach to managing our business and investing in future growth. We operate as a single segment designed to enable guests to purchase products seamlessly in stores or through our digital channels. Since 1946, we have given 5 percent of our profit to communities.
A few quick facts about Target
Overview of the latest quarterly earnings report of Target (TGT)
Our latest stock valuation of Target (TGT): $162.50
A few quick facts about Target
- Target Corporation is listed on the New York Stock Exchange under share code ticker: TGT
- Target Corporation (TGT) market capital: $59.6 billion (as at 17 June 2020)
- Total number of Target outlets: 1,868
- Square footage of all Target outlets: 240 516 000
Overview of the latest quarterly earnings report of Target (TGT)
- Total Revenue: $22.6 billion (up from $18.6 billion for the same quarter of the previous year)
- Revenue increased by 21.3% over the last 12 months
- Cost of sales: $15.5 billion (up from $12.9 billion for the same quarter of the previous year)
- Cost of sales increased by 19.9% over the last 12 months
- Some margin gain for Target Corporation as their total revenues increased at a slightly faster rate than their cost of sales
- Net earnings: $1.014 billion (up 41.9% from $7.14 million for the same quarter of the previous year)
- Diluted earnings per share: $2.01 (up from $1.39 for the same quarter of the previous year)
- PE ratio of Target: 21.9
- Cash dividends per share: $ 0.68 (up from $0.66 for the same quarter of the previous year)
- Dividend yield of Target Corporation: 1.6%
- Diluted number of shares in issue: 505.4 million (down from 514.8 million for the same quarter of the previous year)
- Cash and cash equivalents: $5.996 billion
- Cash and cash equivalents per share: $11.86
- Cash and cash equivalents makes up 6.8% of Target's market capital
- Cash and cash equivalents makes up 11.8% of Target's total assets
- Cash and cash equivalents per share: $11.86
- Inventories: $12.7 billion
- Inventories makes up 25.1% of Target's total assets
- Total stockholders equity in Target Corporation: $13.319 billion
- Stockholders equity per share: $26.35
- Target is trading at 6.5 times its stockholders equity per share, which is well outside the expected range of between 2 and 4 times that most firms tend to trade at
- The average price to book value of firms in the S&P 500 is currently at 3.9
- Cash generated from operations for 9 months: $7 billion
- Cash generated from operations per share (for 9 months): $13.85
Our latest stock valuation of Target (TGT): $162.50
Walmart (WMT) stock vs Target (TGT) stock price over the last 5 years
The image below shows the stock price history of Walmart (WMT) stock vs Target (TGT) stock performance over the last 5 years. These two companies are two of the biggest general retailers in the world. The summary below shows the stock price performance of the two giant retailers over the last 5 years (ranked from best to worst)
The stock price returns provided by Walmart (WMT) and Target (TGT) over the last 5 years are similar with Walmart just outperforming the stock of Target over the last 5 years.
- Walmart (WMT): 153.4%
- Target (TGT): 147.6%
The stock price returns provided by Walmart (WMT) and Target (TGT) over the last 5 years are similar with Walmart just outperforming the stock of Target over the last 5 years.
Financial fundamentals comparison between Walmart (WMT) and Target (TGT)
So let's take a look at the fundamentals and the valuation metrics in order to determine which of these two firms offers the most value at their current stock price.
One of our key metrics is the Price to Stockholders equity per share ratio. When looking at this we find the following:
Based on this metric Walmart offers far more value than Target Corp. Most firms tend to trade at a ratio of between 2 and 4 times. The higher this ratio the less value a stock offers. A ratio of 6.5 is implying that buying the stock of Target now means you are paying 6.5 times more for the stock than what the stockholders equity per share is worth. But a high stockholders equity per share ratio is still better than a firm that has a stockholders deficit. So what is the stockholders equity per share you ask? Well if a firm sells all assets, pays all its debts ad distributes the rest to its stockholders, the stockholders equity per share shows what each stockholders will get. Thus the higher this ratio the less you will get out per stock compared to what you are paying for it. So for Target at 6.5 times it stockholders equity you will only get 15.38% of its current stock price out of they were to sell all assets, pay all debt and distribute the rest to stockholders. Walmart is slightly better at 20.4% of current stock price
Next up cash as percentage of stock price:
Next up lets take a look at the percentage cash on the balance sheet makes up of each group's total assets:
So based on the cash position of these two firms Target (TGT) offers more value as their overall cash position compared to their stock price and their overall assets is far greater than that of Walmart (WMT).
Next up the PE ratio of the stocks:
One of our key metrics is the Price to Stockholders equity per share ratio. When looking at this we find the following:
- Price/Stockholders equity per share for Walmart (WMT): 4.9
- Price/Stockholders equity per share for Target (TGT): 6.5
Based on this metric Walmart offers far more value than Target Corp. Most firms tend to trade at a ratio of between 2 and 4 times. The higher this ratio the less value a stock offers. A ratio of 6.5 is implying that buying the stock of Target now means you are paying 6.5 times more for the stock than what the stockholders equity per share is worth. But a high stockholders equity per share ratio is still better than a firm that has a stockholders deficit. So what is the stockholders equity per share you ask? Well if a firm sells all assets, pays all its debts ad distributes the rest to its stockholders, the stockholders equity per share shows what each stockholders will get. Thus the higher this ratio the less you will get out per stock compared to what you are paying for it. So for Target at 6.5 times it stockholders equity you will only get 15.38% of its current stock price out of they were to sell all assets, pay all debt and distribute the rest to stockholders. Walmart is slightly better at 20.4% of current stock price
Next up cash as percentage of stock price:
- Cash as percentage of stock price for Walmart (WMT): 3.3%
- Cash as percentage of stock price for Target (TGT) : 6.8%
Next up lets take a look at the percentage cash on the balance sheet makes up of each group's total assets:
- Cash as percentage of stock price for Walmart (WMT) : 5.7%
- Cash as percentage of stock price for Target (TGT): 11.8%
So based on the cash position of these two firms Target (TGT) offers more value as their overall cash position compared to their stock price and their overall assets is far greater than that of Walmart (WMT).
Next up the PE ratio of the stocks:
- PE ratio for Walmart (WMT): 20.1
- PE ratio for Target (TGT) : 21.9
Price relative to stock valuation
Looking at all the fundamental metrics above Walmart wins on the Price/Stockholders equity per share metric, but loses out on the cash as percentage of stock price, where Target is the winner. Target also has the stronger cash position with their cash as percentage of total assets being higher than that of Walmart. When looking at the PE ratio it is Walmart that has the lower PE ratio. Walmart is trading at a very slight discount to our latest stock valuation of the group, while Target is trading at about 9% above our latest stock valuation (target price) for the group.
Therefore all things considered in the battle between Walmart (WMT) vs Target (TGT) we rate the stock of Walmart (WMT) the winner.
- Price/Stock Valuation ratio for Walmart (WMT): 0.998
- Price/Stock Valuation ratio for Target (TGT) : 1.093
Looking at all the fundamental metrics above Walmart wins on the Price/Stockholders equity per share metric, but loses out on the cash as percentage of stock price, where Target is the winner. Target also has the stronger cash position with their cash as percentage of total assets being higher than that of Walmart. When looking at the PE ratio it is Walmart that has the lower PE ratio. Walmart is trading at a very slight discount to our latest stock valuation of the group, while Target is trading at about 9% above our latest stock valuation (target price) for the group.
Therefore all things considered in the battle between Walmart (WMT) vs Target (TGT) we rate the stock of Walmart (WMT) the winner.
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