In the dynamic 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 and its primary competitors in the Consumer Staples Distribution & Retail industry. By closely examining key financial metrics, market position, and growth prospects, our aim is 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 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 | 41.82 | 7.64 | 0.98 | 5.43% | $10.1 | $42.52 | 4.77% |
| Costco Wholesale Corp | 53.75 | 16.70 | 1.56 | 10.37% | $3.87 | $10.11 | 0.96% |
| Target Corp | 16.32 | 5.04 | 0.68 | 8.43% | $2.4 | $7.65 | 2.74% |
| Dollar General Corp | 12.40 | 2.42 | 0.44 | 5.25% | $0.79 | $3.06 | 4.23% |
| BJ's Wholesale Club Holdings Inc | 21.56 | 6.84 | 0.56 | 9.11% | $0.27 | $0.96 | 4.87% |
| Pricesmart Inc | 22.02 | 2.53 | 0.57 | 2.96% | $0.07 | $0.21 | 12.11% |
| Sendas Distribuidora SA | 14.73 | 2.02 | 0.14 | 2.58% | $1.34 | $2.95 | 11.81% |
| Almacenes Exito SA | 101.90 | 0.47 | 0.15 | -0.29% | $303.29 | $1299.7 | -0.86% |
| Average | 34.67 | 5.15 | 0.59 | 5.49% | $44.58 | $189.23 | 5.12% |
By thoroughly analyzing Walmart, we can discern the following trends:
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The Price to Earnings ratio of 41.82 for this company is 1.21x above the industry average, indicating a premium valuation associated with the stock.
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With a Price to Book ratio of 7.64, which is 1.48x 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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The stock's relatively high Price to Sales ratio of 0.98, surpassing the industry average by 1.66x, may indicate an aspect of overvaluation in terms of sales performance.
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The company has a lower Return on Equity (ROE) of 5.43%, which is 0.06% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.
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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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The company has lower gross profit of $42.52 Billion, which indicates 0.22x below the industry average. This potentially indicates 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 5.12%, which indicates a challenging sales environment.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.
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.
By considering the Debt-to-Equity ratio, Walmart can be compared to its top 4 peers, leading to the following observations:
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Walmart is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.73.
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This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.
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, the low ROE, EBITDA, gross profit, and revenue growth suggest that Walmart may be facing challenges in generating profits and growing its business in comparison to industry competitors.
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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