Amidst today's fast-paced and highly competitive business environment, it is crucial for investors and industry enthusiasts to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Walmart WMT in comparison to its major competitors within the Consumer Staples Distribution & Retail industry. By analyzing critical financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of 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 company'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 | 40.22 | 7.36 | 0.94 | 5.43% | $10.1 | $42.52 | 4.77% |
| Costco Wholesale Corp | 55.32 | 18.17 | 1.56 | 7.9% | $2.84 | $7.34 | 9.07% |
| Target Corp | 15.87 | 4.90 | 0.66 | 8.43% | $2.4 | $7.65 | 2.74% |
| Dollar General Corp | 12.90 | 2.51 | 0.46 | 5.25% | $0.79 | $3.06 | 4.23% |
| BJ's Wholesale Club Holdings Inc | 20.19 | 6.41 | 0.53 | 9.11% | $0.27 | $0.96 | 4.87% |
| Pricesmart Inc | 21.81 | 2.51 | 0.56 | 2.96% | $0.07 | $0.21 | 12.11% |
| Sendas Distribuidora SA | 19.01 | 2.61 | 0.18 | 2.58% | $1.34 | $2.95 | 11.81% |
| Almacenes Exito SA | 93.69 | 0.44 | 0.14 | -0.29% | $303.29 | $1299.7 | -0.86% |
| Average | 34.11 | 5.36 | 0.58 | 5.13% | $44.43 | $188.84 | 6.28% |
By carefully studying Walmart, we can deduce the following trends:
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The current Price to Earnings ratio of 40.22 is 1.18x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.
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With a Price to Book ratio of 7.36, which is 1.37x 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 0.94, which is 1.62x the industry average, the stock might be considered overvalued based on sales performance.
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The Return on Equity (ROE) of 5.43% is 0.3% above the industry average, highlighting efficient use of equity to generate profits.
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The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $10.1 Billion, which is 0.23x below the industry average. This potentially indicates lower profitability or financial challenges.
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Compared to its industry, the company has lower gross profit of $42.52 Billion, which indicates 0.23x below the industry average, potentially indicating lower revenue after accounting for production costs.
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The company's revenue growth of 4.77% is significantly below the industry average of 6.28%. This suggests a potential struggle in generating increased sales volume.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
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 comparing Walmart with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:
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Among its top 4 peers, Walmart has a stronger financial position with a lower debt-to-equity ratio of 0.73.
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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
The high PE, PB, and PS ratios of Walmart indicate that the company is relatively overvalued compared to its peers in the Consumer Staples Distribution & Retail industry. On the other hand, Walmart's high ROE suggests strong profitability, while its low EBITDA, gross profit, and revenue growth may raise concerns about the company's operational efficiency and growth potential within the industry sector.
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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