Wal-Mart Company Analysis

By Jean-Laurent Pelissier, Magdalena Besser, Zhengran Zhou, Dai-Ying Wu

Company Overview
2,100,000 Employees Founded in 1945 and is based in Bentonville, Arkansas. Offers general merchandise: Food, Clothes, Electronics, Jewelry, etc Ranked first in Fortune 500

Industry Analysis
Discount, Variety Stores Carrefour (not listed in US) second largest retail company in the world (by revenue)

market cap Wal-Mart Costco Target Industry (WMT) (COST) (TGT) 225B 31.7B 44.6B 314B income 12.88B 1.19B 2.85B --profit margin 3.36% 1.75% 4.50% 3.40% PE 18.04 27.18 16.46 15.4

Financial
Revenue $378 B Return on Equity 21.24% (highest in industry) Dividend Yield 1.7-% (2nd highest)

WMT Sales Growth Income Growth +8.60% +6.90% TGT +6.50% -8.00% COST +7.10% +31.40%

Debt/Equity Ratio 0.76

1.12

0.26

Technical Analysis

Technical Analysis (Cont.)

Technical Analysis (Cont.)

Economic Outlook

Economic Outlook Unemployment rate as of May 18, 2008: National: 5.0% CA: 6.2% (CA ranks 48 out of 52; 4th worst in the nation). All of the following information is from CNN Money as of May 18, 2008. Gas hits 11th straight record high: The price for a gallon of gas sets new all-time high at $3.793(national average), according to AAA.

Economic Outlook (Cont.)

7 economic indicators The reading Sales excluding autos top forecasts in April report. Minus 20,000 in April Unchanged in April. At 5-year low. Slight increase after months of declines. Next update June 12

The indicator Retail Sales

Job Growth Manufacturing Consumer Confidence Leading Indicators

June 6 June 2 May 27 May 19

Industrial Production
Inflation CPI

Rebounded in March.
Running at 4%

May 15
May 14

Economic Outlook (Cont.)

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The sick dollar may be getting a little healthier but it is far from making a full recovery. Wal-mart April sales went up by 6.5% compared to those of April 07. This shows that retail industry is still strong despite overall declining of the economy.

Strengths

Wal-Mart is a well known store worldwide and in this time of economic uncertainty, consumers must rely on cheap products to maintain their standards of living Very advanced information technology. Wal-Mart is able to manage its products around the world and enables the management to take quick cost effective decisions.

Weaknesses
Although Wal-Mart has a global presence, it is only concentrated in a few countries. Wal-Mart does not specialize in any specific goods and may not have the needed expertise on managing some of these goods.

Opportunities
Since Wal-Mart only operates in a few countries, there is a great opportunity to expand to other areas. With recent economic uncertainties, WalMart can no market its good towards a larger group of consumers.

Threats

The prices of consumer goods offered by WalMart have decreased greatly due to outsourcing. Many companies have started to outsource which leads to high price competition between companies in this industry. Wal-Mart is the leading company in the Discount, Variety Store industry and is target of high competition, and with the increase in outsourcing, this could lead to decrease in net income.

Recommendation
Hold Wal-Mart is a relatively stable investment. This stock is built for long term investors and should not be used for short term gains. If you own the stock hold it, but dont go out and buy this stock. Its not a money maker, its a long term investment.