netrashetty
Netra Shetty
Wal-Mart Stores, Inc. (formerly branded as Wal-Mart, branded as Walmart since 2008) (NYSE: WMT) is an American public multinational corporation that runs a chain of large discount department stores and a chain of warehouse stores. In 2010 it was the world's largest public corporation by revenue, according to the Forbes Global 2000 for that year.[6] The company was founded by Sam Walton in 1962, incorporated on October 31, 1969, and publicly traded on the New York Stock Exchange in 1972. Wal-Mart, headquartered in Bentonville, Arkansas, is the largest majority private employer[7] and the largest grocery retailer in the United States. In 2009, it generated 51% of its US$258 billion sales in the U.S. from grocery business.[8] It also owns and operates the Sam's Club retail warehouses in North America.
Wal-Mart has 8,500 stores in 15 countries, with 55 different names.[9] The company operates under its own name in the United States, including the 50 states. It also operates under its own name in Puerto Rico. Wal-Mart operates in Mexico as Walmex, in the United Kingdom as Asda ("Asda Wal-Mart" in some branches), in Japan as Seiyu, and in India as Best Price. It has wholly owned operations in Argentina, Brazil, and Canada. Wal-Mart's investments outside North America have had mixed results: its operations in the United Kingdom, South America and China are highly successful, while it was forced to pull out of Germany and South Korea when ventures there were unsuccessful.
Wal-Mart Stores, Inc. (formerly branded as Wal-Mart, branded as Walmart since 2008) (NYSE: WMT) is an American public multinational corporation that runs a chain of large discount department stores and a chain of warehouse stores. In 2010 it was the world's largest public corporation by revenue, according to the Forbes Global 2000 for that year.[6] The company was founded by Sam Walton in 1962, incorporated on October 31, 1969, and publicly traded on the New York Stock Exchange in 1972. Wal-Mart, headquartered in Bentonville, Arkansas, is the largest majority private employer[7] and the largest grocery retailer in the United States. In 2009, it generated 51% of its US$258 billion sales in the U.S. from grocery business.[8] It also owns and operates the Sam's Club retail warehouses in North America.
Wal-Mart has 8,500 stores in 15 countries, with 55 different names.[9] The company operates under its own name in the United States, including the 50 states. It also operates under its own name in Puerto Rico. Wal-Mart operates in Mexico as Walmex, in the United Kingdom as Asda ("Asda Wal-Mart" in some branches), in Japan as Seiyu, and in India as Best Price. It has wholly owned operations in Argentina, Brazil, and Canada. Wal-Mart's investments outside North America have had mixed results: its operations in the United Kingdom, South America and China are highly successful, while it was forced to pull out of Germany and South Korea when ventures there were unsuccessful.
Revenue in the recent quarter was 0.6 percent less than in the same quarter of 2008. Revenue would have increased by 4.5 percent if there had been no variations in currency exchange rates. All year-to-year comparisons in this report use restated values for the April 2008 quarter.
Our estimate, which was calculated after sales data for February and March were published, proved too optimistic by 2.2 percent. This suggests that sales in the month of April weakened, or the exchange rate situation worsened.
The Cost of Goods Sold ((CGS)) was 75.3 percent of Revenue, which translates into a Gross Margin of 24.7 percent. The margin increased from 24.1 percent in the April 2008 quarter. Our target for the margin in the latest quarter was 23.5 percent of Revenue. Therefore, on a Gross Margin basis, Wal-Mart was 1.2 percent more profitable than we expected.
Sales, General, and Administrative (SG&A) expenses in the quarter were 19.9 percent of Revenue, up from 19.4 percent last year. We had estimated that these expenses would be 19 percent of Revenue.
Operating Income, as we define it, eked out a 0.6 percent gain. Our estimate was 3.3 percent too low, with lower-than-expected CGS have a greater effect than lower-than-expected Revenue.
Other income, which in our approach includes membership income, was 24 percent less than last year's result, and it was much about half of our target.
The Income Tax Rate was 33.7 percent, which was a little less burdensome than the predicted 34.2 percent.
Net Income attributable to Wal-Mart was exactly unchanged from April 2008. This Net Income value was a 2.5 percent below our forecast. EPS fell $0.01 short of our prediction.
Now for the gauges:
Cash Management April 2009 3 months prior 12 months prior
Current Ratio 0.8 0.9 0.8
LTD/Equity 50.8% 46.7% 49.7%
Debt/CFO 1.7 years 1.7 years 2.0 years
Inventory/CGS 41.9 days 41.6 days 44.1 days
Finished Goods/Inventory N/A N/A N/A
Days of Sales Outstanding (DSO) 3.0 days 3.4 days 2.9 days
Working Capital/Invested Capital -8.9% -6.5% -10.2%
Cash Conversion Cycle Time 10.3 days 9.6 days 11.8 days
Gauge Score (0 to 25)
9 7 7
The two-point increase in the Cash Management score was mostly the result of the Cash Conversion Cycle Time, relative to last year. Lower durations indicate greater efficiency. The leaner inventory in April 2009 than April 2008 also helped.
The negative Working Capital ratio was a downward force on this gauge.
Growth April 2009 3 months prior 12 months prior
Revenue growth 4.6% 7.2% 9.0%
Revenue/Assets 243% 245% 237%
CFO growth 1.6% 12.1% 25.0%
Net Income growth 1.7% 3.7% 5.8%
Gauge Score (0 to 25) 11 14
7
Growth rates are trailing four quarters compared to four previous quarters.
The rapidly contracting growth rates -- Cash Flow from Operations especially -- hurt the Growth gauge. The increase in Revenue relative to Assets softened the decline.
Profitability April 2009 3 months prior 12 months prior
Operating Expenses/Revenue 95.3% 95.3% 95.2%
ROIC 12.8% 12.5% 11.9%
Free Cash Flow/Invested Capital 11.6% 11.8% 8.2%
Accrual Ratio 1.3% 0.6% 2.9%
Gauge Score (0 to 25) 9 10 7
It's remarkable that Wal-Mart has been able to keep Operating Expenses so steady when the economy is so weak. ROIC and FCF have also held up nicely.
We would like to see the Accrual Ratio decrease, which would signal improved Earnings Quality. However, weak CFO has precluded this result.
Value April 2009 3 months prior 12 months prior
P/E 14.8 13.9 17.8
P/E vs. S&P 500 P/E 86% 80% 96%
PEG 0.6 0.7 0.6
Price/Revenue 0.5 0.5 0.6
Enterprise Value/Cash Flow (EV/CFO) 10.1 9.4 11.8
Gauge Score (0 to 25) 9
13 4
Wal-Mart's share price increased 7 percent during the quarter, from $47.12 to $50.40. The combination of this rise with signs of a slowdown caused the Value metrics to become relatively less appealing.
Wal-Mart's valuation ratios can be compared with other Discount and Variety Retailers.
Overall April 2009 3 months prior 12 months prior
Gauge Score (0 to 100) 38
44 23
Wal-Mart's Operating and Net Income figures were nearly unchanged in the April 2009 quarter, when compared to the April 2008 quarter. Revenue was a little lighter than we expected, but the Gross Margin was higher.
Wal-Mart has 8,500 stores in 15 countries, with 55 different names.[9] The company operates under its own name in the United States, including the 50 states. It also operates under its own name in Puerto Rico. Wal-Mart operates in Mexico as Walmex, in the United Kingdom as Asda ("Asda Wal-Mart" in some branches), in Japan as Seiyu, and in India as Best Price. It has wholly owned operations in Argentina, Brazil, and Canada. Wal-Mart's investments outside North America have had mixed results: its operations in the United Kingdom, South America and China are highly successful, while it was forced to pull out of Germany and South Korea when ventures there were unsuccessful.
Wal-Mart Stores, Inc. (formerly branded as Wal-Mart, branded as Walmart since 2008) (NYSE: WMT) is an American public multinational corporation that runs a chain of large discount department stores and a chain of warehouse stores. In 2010 it was the world's largest public corporation by revenue, according to the Forbes Global 2000 for that year.[6] The company was founded by Sam Walton in 1962, incorporated on October 31, 1969, and publicly traded on the New York Stock Exchange in 1972. Wal-Mart, headquartered in Bentonville, Arkansas, is the largest majority private employer[7] and the largest grocery retailer in the United States. In 2009, it generated 51% of its US$258 billion sales in the U.S. from grocery business.[8] It also owns and operates the Sam's Club retail warehouses in North America.
Wal-Mart has 8,500 stores in 15 countries, with 55 different names.[9] The company operates under its own name in the United States, including the 50 states. It also operates under its own name in Puerto Rico. Wal-Mart operates in Mexico as Walmex, in the United Kingdom as Asda ("Asda Wal-Mart" in some branches), in Japan as Seiyu, and in India as Best Price. It has wholly owned operations in Argentina, Brazil, and Canada. Wal-Mart's investments outside North America have had mixed results: its operations in the United Kingdom, South America and China are highly successful, while it was forced to pull out of Germany and South Korea when ventures there were unsuccessful.
Revenue in the recent quarter was 0.6 percent less than in the same quarter of 2008. Revenue would have increased by 4.5 percent if there had been no variations in currency exchange rates. All year-to-year comparisons in this report use restated values for the April 2008 quarter.
Our estimate, which was calculated after sales data for February and March were published, proved too optimistic by 2.2 percent. This suggests that sales in the month of April weakened, or the exchange rate situation worsened.
The Cost of Goods Sold ((CGS)) was 75.3 percent of Revenue, which translates into a Gross Margin of 24.7 percent. The margin increased from 24.1 percent in the April 2008 quarter. Our target for the margin in the latest quarter was 23.5 percent of Revenue. Therefore, on a Gross Margin basis, Wal-Mart was 1.2 percent more profitable than we expected.
Sales, General, and Administrative (SG&A) expenses in the quarter were 19.9 percent of Revenue, up from 19.4 percent last year. We had estimated that these expenses would be 19 percent of Revenue.
Operating Income, as we define it, eked out a 0.6 percent gain. Our estimate was 3.3 percent too low, with lower-than-expected CGS have a greater effect than lower-than-expected Revenue.
Other income, which in our approach includes membership income, was 24 percent less than last year's result, and it was much about half of our target.
The Income Tax Rate was 33.7 percent, which was a little less burdensome than the predicted 34.2 percent.
Net Income attributable to Wal-Mart was exactly unchanged from April 2008. This Net Income value was a 2.5 percent below our forecast. EPS fell $0.01 short of our prediction.
Now for the gauges:
Cash Management April 2009 3 months prior 12 months prior
Current Ratio 0.8 0.9 0.8
LTD/Equity 50.8% 46.7% 49.7%
Debt/CFO 1.7 years 1.7 years 2.0 years
Inventory/CGS 41.9 days 41.6 days 44.1 days
Finished Goods/Inventory N/A N/A N/A
Days of Sales Outstanding (DSO) 3.0 days 3.4 days 2.9 days
Working Capital/Invested Capital -8.9% -6.5% -10.2%
Cash Conversion Cycle Time 10.3 days 9.6 days 11.8 days
Gauge Score (0 to 25)
9 7 7
The two-point increase in the Cash Management score was mostly the result of the Cash Conversion Cycle Time, relative to last year. Lower durations indicate greater efficiency. The leaner inventory in April 2009 than April 2008 also helped.
The negative Working Capital ratio was a downward force on this gauge.
Growth April 2009 3 months prior 12 months prior
Revenue growth 4.6% 7.2% 9.0%
Revenue/Assets 243% 245% 237%
CFO growth 1.6% 12.1% 25.0%
Net Income growth 1.7% 3.7% 5.8%
Gauge Score (0 to 25) 11 14
7
Growth rates are trailing four quarters compared to four previous quarters.
The rapidly contracting growth rates -- Cash Flow from Operations especially -- hurt the Growth gauge. The increase in Revenue relative to Assets softened the decline.
Profitability April 2009 3 months prior 12 months prior
Operating Expenses/Revenue 95.3% 95.3% 95.2%
ROIC 12.8% 12.5% 11.9%
Free Cash Flow/Invested Capital 11.6% 11.8% 8.2%
Accrual Ratio 1.3% 0.6% 2.9%
Gauge Score (0 to 25) 9 10 7
It's remarkable that Wal-Mart has been able to keep Operating Expenses so steady when the economy is so weak. ROIC and FCF have also held up nicely.
We would like to see the Accrual Ratio decrease, which would signal improved Earnings Quality. However, weak CFO has precluded this result.
Value April 2009 3 months prior 12 months prior
P/E 14.8 13.9 17.8
P/E vs. S&P 500 P/E 86% 80% 96%
PEG 0.6 0.7 0.6
Price/Revenue 0.5 0.5 0.6
Enterprise Value/Cash Flow (EV/CFO) 10.1 9.4 11.8
Gauge Score (0 to 25) 9
13 4
Wal-Mart's share price increased 7 percent during the quarter, from $47.12 to $50.40. The combination of this rise with signs of a slowdown caused the Value metrics to become relatively less appealing.
Wal-Mart's valuation ratios can be compared with other Discount and Variety Retailers.
Overall April 2009 3 months prior 12 months prior
Gauge Score (0 to 100) 38
44 23
Wal-Mart's Operating and Net Income figures were nearly unchanged in the April 2009 quarter, when compared to the April 2008 quarter. Revenue was a little lighter than we expected, but the Gross Margin was higher.