Walmart Financial Analysis
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This company analysis provides an evaluation of Wal-Marts operations, top executives and financial and stock market performance to demonstrate whether Wal-Mart should be chosen as an investment. These conclusions show that the company is successful and progressing in business as well as the stock market. The financial statements are adequate therefore proving the company is profitable regarding industry averages. Therefore, it is recommended that investors consider this company for their investment portfolio.
Brief Company Description
Wal-Mart serves customers and members more than 200 million times per week at more than 8,692 retail units under 55 different banners in 15 countries. Wal-Mart employs 2.1 million associates worldwide and had fiscal year 2010 sales of $405 billion.
Wal-Mart was founded in 1962, with the opening of the first Wal-Mart discount store in Rogers, AR. The company incorporated as Wal-Mart Stores, Inc., on Oct. 31, 1969. The companys shares began trading on OTC markets in 1970 and were listed on the New York Stock Exchange two years later. The company grew to 276 stores in 11 states by the end of the decade. In 1983, the company opened its first Sams Club membership warehouse and in 1988 opened the first supercenter — now the companys dominant format — featuring a complete grocery in addition to general merchandise. Wal-Mart became an international company in 1991 when it opened its first Sams Club near Mexico City
Top Executives and Directors
William S. Simon, President and CEO, Wal-Mart U.S.
Bill Simon was appointed president and CEO of Wal-Mart U.S. in June 2010. He is responsible for the strategic direction and operational performance of the U.S. business, including more than 3,700 stores and 1.3 million associates. Prior to his current role, Bill was the chief operating officer for Wal-Mart U.S., a position he held since 2007.
Thomas M. Schoewe, Executive Vice President and Chief Financial Officer
Tom Schoewe is executive vice president and chief financial officer for Wal-Mart, a position to which he was appointed in January 2000. He is responsible for accounting and control, business planning and analysis, internal auditing, treasury, tax, and several other key areas of the company. The lead financial executive in each operating segment of the company (Wal-Mart U.S., Sams Club and Wal-Mart International) reports directly to him.
S. Robson Walton, Chairman of the Board of Directors
Son of Wal-Mart founder Sam Walton, Rob is Wal-Marts Chairman of the Board of Directors, a position he has held since 1992. Since joining Wal-Mart in 1969, Rob has served as Senior Vice President, Secretary and General Counsel, and Vice Chairman. Prior to his employment at Wal-Mart, Rob was in private law practice as a partner with the law firm of Conner and Winters in Tulsa, Oklahoma.
Financial Press Within the Last Five Years
Event
Effects on Walmart/Investors
11/29/2010
Walmart Confirms Offer to Acquire 51% of Massmart
New growth opportunities
03/04/2010
Walmart Increased Annual Dividend 11%
Increased dividend 11% from
previous year.
10/22/2009
Walmart Updates Growth Plans
Spending up from 11.5 billion to 12.5 – 13.1 billion dollars
Intended to increase shareholder value
06/05/2009
Walmart Board Approves $15 Billion Share Repurchase Program
Repurchased shares are retired
Returns value to shareholders
10/23/2007
Walmart Updates New Growth Plans
Worldwide expansion to improve cash flow and provide stronger returns
03/08/2007
Walmart Increases Annual Dividend 31%
Returned more than $3.6 billion dollars to the shareholders
07/28/2006
Walmart pulls out of Germany
$1 billion loss
01/11/2005
Walmart announces launch of debt offering
$1 billion notes were offered
2010 Financial Five Year Summary
The following chart illustrates the income and operating expenses of Wal-Mart as well as the financial position and store counts in the United States and internationally. It confirms that Wal-Mart had a significant growth in sales from 2006 through the end of 2008 and slowed substantially in 2009 through to January 2010, however growth in comparable stores throughout the United States had a much lower growth rate placing Wal-Mart ahead of the game in sales. Even with growth slowing down dividends to shareholders actually increased at a higher rate than the growth rate.
Market Performance Analysis
Below are the major ratios demonstrating Wal-Marts performance compared to a similar industry and the SMP 500. The industry compared is represented by discount/variety retail stores.
% Growth Rates
The chart shows the growth rate in sales compared to other S&P 500 companies was much lower in 2009, about 6 times less, on the other hand the five year average growth in sales was around the same as the S&P 500 average. This could mean Wal-Marts growth rate is beginning to slow down due to its large size and lack of areas to grow. The dividends however are well above the S&P 500 signifying that whether the growth rate is high or low the dividends still remain high.
% Profit Margins
This chart shows that the profit margin for Wal-Mart and similar industries is very similar over the past 5 years. This could mean that any changes in profit werent necessarily related to Wal-Mart itself but to the change in the economy and consumer purchasing.
Financial Condition