Market Analysis: Walmart And Competitors In Consumer Staples Distribution & Retail Industry

In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating Walmart WMT in relation to its major competitors in the Consumer Staples Distribution & Retail industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate company's performance in 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.

By carefully studying Walmart, we can deduce the following trends:

• With a Price to Earnings ratio of 29.04, which is 0.94x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.

• With a Price to Book ratio of 6.69, which is 1.22x 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.

• The Price to Sales ratio of 0.83, which is 1.41x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

• The Return on Equity (ROE) of 6.18% is 1.73% above the industry average, highlighting efficient use of equity to generate profits.

• The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $10.88 Billion, which is 0.3x below the industry average. This potentially indicates lower profitability or financial challenges.

• The company has lower gross profit of $40.08 Billion, which indicates 0.21x below the industry average. This potentially indicates lower revenue after accounting for production costs.

• The company's revenue growth of 6.05% exceeds the industry average of 5.58%, indicating strong sales performance and market outperformance.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage of a company.

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 assessing Walmart against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:

• When comparing the debt-to-equity ratio, Walmart is in a stronger financial position compared to its top 4 peers.

• The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 0.79.

Key Takeaways

The PE, PB, and PS ratios for Walmart indicate that it may be undervalued compared to its peers in the Consumer Staples Distribution & Retail industry. However, Walmart's high ROE suggests strong profitability relative to its low EBITDA and gross profit margins. Additionally, the high revenue growth rate of Walmart outperforms its industry peers, highlighting potential for future expansion and market dominance.

This article was generated by Benzinga's automated content engine and reviewed by an editor.