assignment
200 160
100 80 60 50 40 30
20
Percent shares traded
12 8 4
Target Price Range 2021 2022 2023
WALMART INC. NYSE-WMT 96.25 20.4 19.915.0 1.28 2.2% TIMELINESS 1 Raised 1/11/19 SAFETY 1 Raised 2/15/02 TECHNICAL 3 Lowered 1/18/19 BETA .70 (1.00 = Market)
2021-23 PROJECTIONS Ann’l Total
Price Gain Return High 140 (+45%) 12% Low 115 (+20%) 7% Insider Decisions
M A M J J A S O N to Buy 0 0 0 0 0 0 0 0 0 Options 9 8 10 0 8 1 0 7 0 to Sell 0 0 0 3 0 3 2 0 2 Institutional Decisions
1Q2018 2Q2018 3Q2018 to Buy 802 824 800 to Sell 831 762 793 Hld’s(000) 885455 875087 869162
High: 51.4 63.8 57.5 56.3 60.0 77.6 81.4 88.1 91.0 75.2 100.1 110.0 Low: 42.1 43.1 46.3 47.8 48.3 57.2 67.7 72.3 56.3 60.2 65.3 81.8
% TOT. RETURN 12/18 THIS VL ARITH.*
STOCK INDEX 1 yr. -3.4 -11.6 3 yr. 64.2 23.6 5 yr. 34.7 23.0
CAPITAL STRUCTURE as of 10/31/18 Total Debt $60991 mill. Due in 5 Yrs $13861 mill. LT Debt $49896 mill. LT Interest $2100 mill. Incl. $6621 mill. property under capital lease. (Total interest coverage: 10.5x) (41% of Cap’l)
Leases, Uncapitalized Annual rentals $2270 mill.
No Defined Benefit Pension Plan Pfd Stock None
Common Stock 2,905,260,059 shs. as of 11/28/18
MARKET CAP: $280 billion (Large Cap) CURRENT POSITION 2016 2017 10/31/18
($MILL.) Cash Assets 6867 6756 9174 Receivables 5835 5614 5785 Inventory (LIFO) 43046 43783 50380 Other 1941 3511 4107 Current Assets 57689 59664 69446 Accts Payable 41433 46092 49729 Debt Due 3920 9662 11095 Other 21575 22767 24927 Current Liab. 66928 78521 85751
ANNUAL RATES Past Past Est’d ’15-’17 of change (per sh) 10 Yrs. 5 Yrs. to ’21-’23 Sales 6.5% 4.0% 4.5% ‘‘Cash Flow’’ 6.0% 2.0% 6.0% Earnings 4.5% -0.5% 7.0% Dividends 11.0% 7.0% 7.5% Book Value 6.0% 4.0% 3.5% Fiscal Year
Begins
Full Fiscal Year
QUARTERLY SALES ($ mill.) A Apr.30 Jul.31 Oct.31 Jan.31
2015 114826 120229 117408 129667 482130 2016 115904 120854 118179 130936 485873 2017 117542 123355 123179 136267 500343 2018 122700 128028 124894 139878 515500 2019 125800 131000 129000 144200 530000 Fiscal Year
Begins
Full Fiscal Year
EARNINGS PER SHARE A B Apr.30 Jul.31 Oct.31 Jan.31
2015 1.03 1.08 1.03 1.43 4.57 2016 .98 1.07 .98 1.30 4.32 2017 1.00 1.08 1.00 1.33 4.42 2018 1.14 1.29 1.08 1.34 4.85 2019 1.08 1.22 1.04 1.36 4.70 Cal- Full
endar Year QUARTERLY DIVIDENDS PAID ■ C
Mar.31 Jun.30 Sep.30 Dec.31 2015 .49 .49 .49 .49 1.96 2016 .50 .50 .50 .50 2.00 2017 .51 .51 .51 .51 2.04 2018 .52 .52 .52 .52 2.08 2019
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 56.09 60.00 68.02 75.79 84.40 95.34 103.34 107.82 119.98 130.76 141.57 147.32 150.45 152.48 2.61 2.95 3.47 3.78 4.27 4.83 5.16 5.64 6.42 6.92 7.69 7.92 7.93 7.64 1.81 2.03 2.41 2.63 2.92 3.16 3.42 3.66 4.07 4.45 5.02 5.11 5.07 4.57 .30 .36 .52 .60 .67 .88 .95 1.09 1.21 1.46 1.59 1.88 1.92 1.96
8.95 10.12 11.67 12.77 14.91 16.26 16.63 18.69 19.49 20.86 23.04 23.59 25.22 25.47 4395.0 4311.0 4234.0 4165.0 4131.0 3973.0 3925.0 3786.0 3516.0 3418.0 3314.0 3233.0 3228.0 3162.0
30.3 26.9 22.8 18.3 16.0 14.9 16.2 13.9 13.1 12.4 13.5 14.9 15.4 15.5 1.66 1.53 1.20 .97 .86 .79 .97 .93 .83 .78 .86 .84 .81 .78 .5% .7% .9% 1.2% 1.4% 1.9% 1.7% 2.1% 2.3% 2.7% 2.3% 2.5% 2.5% 2.8%
405607 408214 421849 446950 469162 476294 485651 482130 24.5% 25.4% 25.3% 25.0% 24.9% 24.8% 24.8% 25.1% 7.3% 7.6% 7.9% 7.7% 7.7% 7.7% 7.6% 7.0% 7720 8416 8970 10130 10773 10942 11453 11528
13512 14204 14921 15523 16999 16728 16426 14694 34.2% 34.1% 34.0% 33.4% 31.0% 32.2% 31.9% 30.3% 3.3% 3.5% 3.5% 3.5% 3.6% 3.5% 3.4% 3.0%
d6441 d7230 d6591 d7325 d11878 d8160 d1994 d4380 34549 36401 43842 47079 41417 44559 43692 44030 65285 70749 68542 71315 76343 76255 81394 80546 14.5% 14.1% 14.1% 14.0% 15.3% 14.7% 14.0% 12.6% 20.7% 20.1% 21.8% 21.8% 22.3% 21.9% 20.2% 18.2% 15.0% 14.1% 15.3% 14.7% 15.2% 13.9% 12.6% 10.4%
28% 30% 30% 33% 32% 37% 38% 43%
2016 2017 2018 2019 © VALUE LINE PUB. LLC 21-23 159.41 169.49 177.75 184.65 Sales per sh A 217.50
7.72 8.07 8.60 8.45 ‘‘Cash Flow’’per sh 11.20 4.32 4.42 4.85 4.70 Earnings per sh A B 6.75 2.00 2.04 2.08 2.12 Div’ds Decl’d per sh ■ C 3.10
25.52 26.38 27.05 27.05 Book Value per sh 32.00 3048.0 2952.0 2900.0 2870.0 Common Shs Outst’g D 2600.0
16.2 18.6 Bold figures are Value Line estimates
Avg Ann’l P/E Ratio 19.0 .85 .93 Relative P/E Ratio 1.20
2.9% 2.5% Avg Ann’l Div’d Yield 2.4%
485873 500343 515500 530000 Sales ($mill) A 565500 25.6% 25.4% 24.5% 24.5% Gross Margin 25.0% 6.7% 6.7% 6.3% 6.2% Operating Margin 7.0%
11695 11718 11810 11980 Number of Stores 12605 13452 13283 14250 13500 Net Profit ($mill) 17550 30.6% 31.4% 25.0% 25.0% Income Tax Rate 25.0% 2.8% 2.7% 2.8% 2.5% Net Profit Margin 3.1%
d9239 d18857 d5300 d5000 Working Cap’l ($mill) 5300 42018 36825 50000 47500 Long-Term Debt ($mill) 40000 77798 77869 78500 77650 Shr. Equity ($mill) 83200 12.1% 12.1% 11.0% 11.0% Return on Total Cap’l 14.0% 17.3% 17.1% 18.0% 17.5% Return on Shr. Equity 21.0% 9.3% 9.2% 10.0% 9.5% Retained to Com Eq 11.5% 46% 46% 43% 45% All Div’ds to Net Prof 46%
Company’s Financial Strength A++ Stock’s Price Stability 95 Price Growth Persistence 25 Earnings Predictability 95
(A) Fiscal year ends Jan. 31st of following calendar year. Sales exclude rentals from li- censed depts. (B) Based on diluted shares. May not sum due to rounding. Excls. n/r
(losses)/gains: ’05, $0.03; ’08, ($0.07); ’09, $0.04; ’10, $0.40; ’11, $0.03; ’13, ($0.23); ’15 ($0.08). Next earnings report due mid- February. (C) Divds. historically paid in early
Mar., May, Aug., and Dec.■ Dividend reinvest- ment plan available. (D) In millions.
BUSINESS: Walmart Inc. owns the world’s largest retail chain, op- erating 3,522 supercenters (includes grocery departments), 415 discount stores, 660 Sam’s Clubs, and 735 Neighborhood Markets in the U.S., plus 6,363 foreign stores, many in Latin America, with the rest in Asia, Canada, and the U.K. as of 1/31/18. Total store space: 1.164 billion square feet. Retail space is largely owned, and
most stores are within 400 miles of a distribution center. Groceries accounted for 56% of U.S. sales; sales per square foot in 2016: about $420. Has 2,300,000 employees. Off./dir. own 51.6% of shares (4/18 proxy). Chairman: Gregory B. Penner. CEO and Pres.: Doug McMillon. Inc.: DE. Addr.: 702 S.W. 8th St., Bentonville, AR 72716. Tel.: 479-273-4000. Internet: www.walmart.com.
Walmart’s consistent results have al- lowed it to outperform its Dow counterparts of late. In the October quarter, revenue increased 1.4% year over year and 2.4% on a constant-currency basis. The domestic business saw same- store sales (excluding fuel) rise 3.4%, with traffic up 1.2% and the average transac- tion amount increasing 2.2%. Nonetheless, the gross margin dropped 28 basis points on lower pricing, greater transportation costs, and a mix shift toward less- profitable e-commerce sales. The online business continues to thrive, with sales growing an eye-opening 43%. The division is on pace for 40% growth for the full year. The company credits a larger product as- sortment and more-efficient delivery for improving demand. Meanwhile, 2,100 gro- cery pickup locations are functional, 700 ‘‘pickup towers’’ will be active by the end of the year, and close to 40% of the U.S. population will soon have access to home delivery through 800 stores. The company faces a roadblock in its efforts to expand in India. Walmart paid $16 billion to purchase a 77% stake in India’s leading online retailer Flipkart.
Recently, Indian regulators announced an update to the country’s policy on foreign direct investment that bans sales of exclu- sive merchandise and places restrictions on discounts/cash back incentives. Too, brands won’t be able to derive more than 25% of sales from any one online platform. We think that the government is trying to appease mom and pop shopkeepers ahead of an election this year. From our perspec- tive, it may prove difficult for Walmart to circumvent these rules and maintain a competitive advantage in India. Further, integration costs will likely reduce this year’s earnings by $0.25-$0.30 and next year’s by $0.60. These shares are favorably ranked (Timeliness: 1). Initiatives to improve the shopping experience appear to be paying off. Too, same-store sales may get a bump if Sears liquidates. The new India regu- lations are a bit concerning, but we expect the e-commerce arm to continue to grow at a fast clip. Still, the shares are trading at a relatively high earnings multiple versus the rest of the retail industry, which may dissuade value-oriented investors. Kevin Downing January 25, 2019
LEGENDS 12.0 x ″Cash Flow″ p sh
. . . . Relative Price Strength Options: Yes Shaded area indicates recession
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