In the fast-paced and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Walmart WMT in comparison to its major competitors within the Consumer Staples Distribution & Retail industry. By analyzing crucial 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 | 42.06 | 7.69 | 0.98 | 5.43% | $10.1 | $42.52 | 4.77% |
| Costco Wholesale Corp | 53.53 | 16.63 | 1.55 | 7.9% | $2.84 | $7.34 | 9.07% |
| Target Corp | 16.10 | 4.98 | 0.67 | 8.43% | $2.4 | $7.65 | 2.74% |
| Dollar General Corp | 13.15 | 2.56 | 0.47 | 5.25% | $0.79 | $3.06 | 4.23% |
| BJ's Wholesale Club Holdings Inc | 20.83 | 6.61 | 0.54 | 9.11% | $0.27 | $0.96 | 4.87% |
| Pricesmart Inc | 22.36 | 2.57 | 0.58 | 2.96% | $0.07 | $0.21 | 12.11% |
| Sendas Distribuidora SA | 15.25 | 2.10 | 0.14 | 2.58% | $1.34 | $2.95 | 11.81% |
| Almacenes Exito SA | 91.92 | 0.43 | 0.13 | -0.29% | $303.29 | $1299.7 | -0.86% |
| Average | 33.31 | 5.13 | 0.58 | 5.13% | $44.43 | $188.84 | 6.28% |
Through a thorough examination of Walmart, we can discern the following trends:
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At 42.06, the stock's Price to Earnings ratio significantly exceeds the industry average by 1.26x, suggesting a premium valuation relative to industry peers.
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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 7.69 which exceeds the industry average by 1.5x.
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The Price to Sales ratio of 0.98, which is 1.69x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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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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Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $10.1 Billion, which is 0.23x 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 $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 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 is an important measure to assess the financial structure and risk profile 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.
In terms of the Debt-to-Equity ratio, Walmart can be assessed by comparing it to its top 4 peers, resulting in the following observations:
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When considering the debt-to-equity ratio, Walmart exhibits a stronger financial position compared to its top 4 peers.
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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
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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