Evaluating Walmart Against Peers In Consumer Staples Distribution & Retail Industry

In today's fast-paced and highly competitive business world, it is crucial for investors and industry followers to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Walmart WMT in relation to its major competitors in the Consumer Staples Distribution & Retail industry. By closely examining key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and highlight 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.

When closely examining Walmart, the following trends emerge:

• At 41.96, the stock's Price to Earnings ratio significantly exceeds the industry average by 1.22x, suggesting a premium valuation relative to industry peers.

• With a Price to Book ratio of 7.67, which is 1.42x 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 0.98, which is 1.66x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

• With a Return on Equity (ROE) of 5.43% that is 0.3% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.

• With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $10.1 Billion, which is 0.23x below the industry average, the company may face lower profitability or financial challenges.

• The gross profit of $42.52 Billion is 0.23x below that of its industry, suggesting potential lower revenue after accounting for production costs.

• The company is witnessing a substantial decline in revenue growth, with a rate of 4.77% compared to the industry average of 6.28%, which indicates a challenging sales environment.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio indicates the proportion of debt and equity used by a company to finance its assets and operations.

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:

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

• This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.73, which can be perceived as a positive aspect by investors.

Key Takeaways

For Walmart, the PE, PB, and PS ratios are all high compared to its peers in the Consumer Staples Distribution & Retail industry, indicating that the stock may be overvalued based on these metrics. On the other hand, Walmart's high ROE suggests strong profitability relative to its equity, while the low EBITDA, gross profit, and revenue growth numbers may raise concerns about the company's operational efficiency and growth potential compared to industry competitors.

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