In today's rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating Walmart WMT against its key competitors in the Consumer Staples Distribution & Retail industry. By analyzing important financial metrics, market position, and growth prospects, we aim to provide valuable insights for investors and shed light on company's performance within the industry.
Walmart Background
Walmart serves as the preeminent retailer in the United States, with its strategy predicated on superior operating efficiency and offering the lowest priced goods to consumers to drive robust store traffic and product turnover. Walmart augmented its low-price business strategy by offering a convenient one-stop shopping destination with the opening of its first supercenter in 1988.Today, Walmart operates over 4,600 stores in the United States (5,200 including Sam's Club) and over 10,000 stores globally. Walmart generated over $440 billion in domestic namesake sales in fiscal 2024, with Sam's Club contributing another $86 billion to the firm's top line. Internationally, Walmart generated $115 billion in sales. The retailer serves around 240 million customers globally each week.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Walmart Inc | 29.57 | 6.82 | 0.85 | 6.18% | $10.88 | $40.08 | -6.85% |
| Costco Wholesale Corp | 52.61 | 17.28 | 1.49 | 7.9% | $2.84 | $7.34 | 9.07% |
| Target Corp | 16.78 | 5 | 0.65 | 6.91% | $2.04 | $7.08 | -3.12% |
| Dollar General Corp | 19.02 | 4.10 | 0.73 | 5.28% | $0.78 | $2.99 | 6.11% |
| BJ's Wholesale Club Holdings Inc | 22.94 | 7.69 | 0.59 | 7.44% | $0.22 | $0.88 | 4.14% |
| Sendas Distribuidora SA | 21.81 | 3.24 | 0.22 | 1.29% | $1.15 | $2.8 | 14.08% |
| Pricesmart Inc | 20.37 | 2.27 | 0.53 | 3.6% | $0.08 | $0.22 | 13.11% |
| Almacenes Exito SA | 68.52 | 0.46 | 0.14 | -0.61% | $245.5 | $1321.95 | -3.32% |
| Average | 31.72 | 5.72 | 0.62 | 4.54% | $36.09 | $191.89 | 5.72% |
After thoroughly examining Walmart, the following trends can be inferred:
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A Price to Earnings ratio of 29.57 significantly below the industry average by 0.93x suggests undervaluation. This can make the stock appealing for those seeking growth.
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With a Price to Book ratio of 6.82, which is 1.19x the industry average, Walmart might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.
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With a relatively high Price to Sales ratio of 0.85, which is 1.37x the industry average, the stock might be considered overvalued based on sales performance.
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The Return on Equity (ROE) of 6.18% is 1.64% above the industry average, highlighting efficient use of equity to generate profits.
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Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $10.88 Billion, which is 0.3x below the industry average, potentially indicating lower profitability or financial challenges.
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Compared to its industry, the company has lower gross profit of $40.08 Billion, which indicates 0.21x below the industry average, potentially indicating lower revenue after accounting for production costs.
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The company's revenue growth of -6.85% is significantly below the industry average of 5.72%. This suggests a potential struggle in generating increased sales volume.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
When examining Walmart in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
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Among its top 4 peers, Walmart has a stronger financial position with a lower debt-to-equity ratio of 0.79.
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This indicates that the company relies less on debt financing and maintains a more favorable balance between debt and equity, which can be viewed positively by investors.
Key Takeaways
For Walmart, the PE ratio is low compared to peers, indicating potential undervaluation. The high PB and PS ratios suggest strong market sentiment and premium valuation. In terms of ROE, Walmart outperforms peers, reflecting efficient use of shareholder equity. However, the low EBITDA, gross profit, and revenue growth may indicate operational challenges compared to industry counterparts.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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