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Category: Walmart and Stock Market
Last updated: 28 May 2020 Stock price: $122.48 On this page we will look to provide more details about Walmart, one of the world's biggest retailers with their 2020 fiscal year revenues topping $524 billion.
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About Walmart
Walmart Inc. ("Walmart," the "Company" or "we") helps people around the world save money and live better – anytime and anywhere – by providing the opportunity to shop in retail stores and through eCommerce. Through innovation, we strive to continuously improve a customer-centric experience that seamlessly integrates our eCommerce and retail stores in an omnichannel offering that saves time for our customers. Each week, we serve over 265 million customers who visit approximately 11,500 stores and numerous eCommerce websites under 56 banners in 27 countries. Our strategy is to make every day easier for busy families, operate with discipline, sharpen our culture and become digital, and make trust a competitive advantage. Making life easier for busy families includes our commitment to price leadership, which has been and will remain a cornerstone of our business, as well as increasing convenience to save our customers time. By leading on price, we earn the trust of our customers every day by providing a broad assortment of quality merchandise and services at everyday low prices ("EDLP"). EDLP is our pricing philosophy under which we price items at a low price every day so our customers trust that our prices will not change under frequent promotional activity. Everyday low cost ("EDLC") is our commitment to control expenses so our cost savings can be passed along to our customers. Our operations comprise three reportable segments: Walmart U.S., Walmart International and Sam's Club
Quick facts about Walmart
- Walmart is listed on the New York Stock Exchange (NYSE) under share code ticker: WMT
- Walmart market capital: $347 billion
- Revenues of $524 billion for 2020 fiscal year
- Earnings per share: $5.19
- Dividends per share: $2.12
- Cash and equivalents on their balance sheet: $9.465 billion
- Stockholders equity : $74.3 billion
- Stockholders equity per share: $26.07
- Price to stockholders equity ratio: 4.7
- Walmart has 2.2 million employees world wide
- Walmart has 1.5 million employees in the U.S
- Walmart has 11 501 retail outlets across the globe
- Walmart has 4 756 Walmart branded stores in the .S
- Walmart has 599 Sam's Club stores in the U.S
Walmarts' different reporting sections
We are engaged in global operations of retail, wholesale and other units, as well as eCommerce, located throughout the U.S., Africa, Argentina, Canada, Central America, Chile, China, India, Japan, Mexico and the United Kingdom. Our operations are conducted in three reportable segments: Walmart U.S., Walmart International and Sam's Club. We define our segments as those operations whose results the chief operating decision maker ("CODM") regularly reviews to analyze performance and allocate resources. Each of our segments contributes to the Company's operating results differently. Each, however, has generally maintained a consistent contribution rate to the Company's net sales and operating income in recent years other than minor changes to the contribution rate for the Walmart International segment due to fluctuations in currency exchange rates. We sell similar individual products and services in each of our segments. It is impracticable to segregate and identify revenues for each of these individual products and services.
Walmart U.S. Segment
Walmart U.S. is our largest segment and operates in the U.S., including in all 50 states, Washington D.C. and Puerto Rico. Walmart U.S. is a mass merchandiser of consumer products, operating under the "Walmart" and "Walmart Neighborhood Market" brands, as well as walmart.com and other eCommerce brands. Walmart U.S. had net sales of $341.0 billion for fiscal 2020, representing 66% of our fiscal 2020 consolidated net sales, and had net sales of $331.7 billion and $318.5 billion for fiscal 2019 and 2018, respectively. Of our three segments, Walmart U.S. has historically had the highest gross profit as a percentage of net sales ("gross profit rate"). In addition, Walmart U.S. has historically contributed the greatest amount to the Company's net sales and operating income
Walmart U.S. Segment
Walmart U.S. is our largest segment and operates in the U.S., including in all 50 states, Washington D.C. and Puerto Rico. Walmart U.S. is a mass merchandiser of consumer products, operating under the "Walmart" and "Walmart Neighborhood Market" brands, as well as walmart.com and other eCommerce brands. Walmart U.S. had net sales of $341.0 billion for fiscal 2020, representing 66% of our fiscal 2020 consolidated net sales, and had net sales of $331.7 billion and $318.5 billion for fiscal 2019 and 2018, respectively. Of our three segments, Walmart U.S. has historically had the highest gross profit as a percentage of net sales ("gross profit rate"). In addition, Walmart U.S. has historically contributed the greatest amount to the Company's net sales and operating income
Walmart properties
The numbers below shows the number of properties of Walmart, broken down into U.S retail and distribution facilities and international retail and distribution facilities. The three numbers per category shows Owned, Leased and Total
U.S. properties
Retail operations
Distribution facilities
Total U.S. properties: 4,701 841 5,542
International properties
Retail operations
Distribution facilities
Total properties
U.S. properties
Retail operations
- Walmart U.S. retail units: 4,069 687 4,756
- Sam's Club retail units: 513 86 599
Distribution facilities
- Walmart U.S. distribution facilities: 108 54 162
- Sam's Club distribution facilities: 11 14 25
Total U.S. properties: 4,701 841 5,542
International properties
Retail operations
- Africa: 37 405 442
- Argentina: 67 25 92
- Canada: 124 284 408
- Central America: 346 490 836
- Chile: 196 171 367
- China: 2 436 438
- India: 2 26 28
- Japan: 54 279 333
- Mexico: 693 1,878 2,571
- United Kingdom: 432 199 631
Distribution facilities
- International distribution facilities 34 187 221
Total properties
- Total retail units: 6,535 4,966 11,501
- Total distribution facilities 153 255 408
- Total properties: 6,688 5,221 11,909
Competition of Walmart
Walmart U.S. competes with omni-channel retailers operating discount, department, retail and wholesale grocers, drug, dollar, variety and specialty stores, supermarkets, hypermarkets and supercenter-type stores, as well as eCommerce retailers. Our ability to develop and operate units at the right locations and to deliver a customer-centric omni-channel experience largely determines our competitive position within the retail industry. We employ many programs designed to meet competitive pressures within our industry. These programs include the following:
• EDLP: our pricing philosophy under which we price items at everyday low prices so our customers trust that our prices will not change under frequent promotional activity;
• EDLC: everyday low cost is our commitment to control expenses so our cost savings can be passed along to our customers; and
• Omni-channel offerings such as Same Day Pickup and Same Day Delivery, where a customer places an order online and picks it up for free from a store or has it delivered; Delivery Unlimited, where a customer can receive unlimited grocery delivery for an annual fee; as well as free two-day shipping without an annual membership fee and free NextDay Delivery on an assortment of best-selling items
• EDLP: our pricing philosophy under which we price items at everyday low prices so our customers trust that our prices will not change under frequent promotional activity;
• EDLC: everyday low cost is our commitment to control expenses so our cost savings can be passed along to our customers; and
• Omni-channel offerings such as Same Day Pickup and Same Day Delivery, where a customer places an order online and picks it up for free from a store or has it delivered; Delivery Unlimited, where a customer can receive unlimited grocery delivery for an annual fee; as well as free two-day shipping without an annual membership fee and free NextDay Delivery on an assortment of best-selling items
Intellectual property of Walmart, seasonality of the business and employees
We regard our trademarks, service marks, copyrights, patents, domain names, trade dress, trade secrets, proprietary technologies, and similar intellectual property as important to our success, and with respect to our associates, customers and others, we rely on trademark, copyright, and patent law, trade-secret protection, and confidentiality and/or license agreements to protect our proprietary rights. We have registered, or applied for the registration of, a number of U.S. and international domain names, trademarks, service marks and copyrights. Additionally, we have filed U.S. and international patent applications covering certain of our proprietary technology. We have licensed in the past, and expect that we may license in the future, certain of our proprietary rights to third parties
Seasonality of our business
Walmart U.S.'s business is seasonal to a certain extent due to calendar events and national and religious holidays, as well as different weather patterns. Historically, its highest sales volume and segment operating income have occurred in the fiscal quarter ending January 31.
Employees
As of the end of fiscal 2020, Walmart Inc. and our subsidiaries employed more than 2.2 million employees ("associates") worldwide, with 1.5 million associates in the U.S. and 0.7 million associates internationally. Similar to other retailers, the Company has a large number of part-time, hourly or non-exempt associates. We believe our relationships with our associates are good. A large number of associates turn over each year, although Walmart U.S. turnover has improved in recent years as a result of our focus on increasing wages and providing improved tools, technology and training to associates.
Walmart U.S.'s business is seasonal to a certain extent due to calendar events and national and religious holidays, as well as different weather patterns. Historically, its highest sales volume and segment operating income have occurred in the fiscal quarter ending January 31.
Employees
As of the end of fiscal 2020, Walmart Inc. and our subsidiaries employed more than 2.2 million employees ("associates") worldwide, with 1.5 million associates in the U.S. and 0.7 million associates internationally. Similar to other retailers, the Company has a large number of part-time, hourly or non-exempt associates. We believe our relationships with our associates are good. A large number of associates turn over each year, although Walmart U.S. turnover has improved in recent years as a result of our focus on increasing wages and providing improved tools, technology and training to associates.
Walmart's (NYSE: WMT) stock performance
This graph compares the cumulative total shareholder return on Walmart's common stock during the five fiscal years ending through fiscal 2020 to the cumulative total returns on the S&P 500 Retailing Index and the S&P 500 Index. The comparison assumes $100 was invested on February 1, 2015, in shares of our common stock and in each of the indices shown and assumes that all of the dividends were reinvested.
A $100 invested at the end of January 2015 would have resulted in an investment worth around $152.65 as at the end of January 2020. That is an annual growth rate of 8.82% over the last 5 years, which is ok returns provided to stockholders, this while the S&P 500 provided an average annual return of 12.3%. So the stock of Walmart has grown at 0.72 times that of the S&P 500
Our latest Walmart stock valuation
So what do we believe Walmart stock is worth after their latest earnings report and their fiscal guidance provided? Based on their 3rd quarter 2019 earnings report and their earnings guidance our valuation model provides a target (full value) price for Walmart stock at $98.70 a stock (down from our 3rd quarter 2019 earnings report valuation of Walmart).
We therefore believe the stock of Walmart is overvalued at its current price.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which in this case is $98.70. A good entry point into Walmart would therefore be at $88.80 or below. We expect the stock of Walmart to pull back from its current levels to levels closer to our target price (full value price) in coming weeks and months.
We therefore believe the stock of Walmart is overvalued at its current price.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which in this case is $98.70. A good entry point into Walmart would therefore be at $88.80 or below. We expect the stock of Walmart to pull back from its current levels to levels closer to our target price (full value price) in coming weeks and months.