March 1, 2016
NYSE: WMT
WAL-MART STORES INC
BUY
A+
A
A-
HOLD
B+
B
Annual Dividend Rate
$1.96
B-
C+
C
Annual Dividend Yield
2.95%
SELL
C-
D+
D
D-
Beta
0.20
WMT BUSINESS DESCRIPTION
Wal-Mart Stores, Inc. operates retail stores in
various formats worldwide. The company operates
through three segments: Walmart U.S., Walmart
International, and Sam's Club.
STOCK PERFORMANCE (%)
3 Mo.
Price Change
10.76
E
E-
Market Capitalization
$212.4 Billion
Sector: Consumer Non-Discretionary
Weekly Price: (US$)
E+
F
BUY
RATING SINCE
TARGET PRICE
52-Week Range
$56.30-$84.16
Sub-Industry: Hypermarkets & Super Centers
SMA (50)
02/23/2016
$76.62
Price as of 2/29/2016
$66.34
Source: S&P
SMA (100)
1 Year
2 Years
90
85
80
TARGET
PRICE
$76.62
TARGET
TARGETPRICE
PRICE$76.62
$76.62
TARGET
PRICE
$76.62
1 Yr.
-20.96
3 Yr (Ann)
-2.14
12 Mo.
-0.73
-10.20
-8.42
3 Yr CAGR
0.95
-4.74
-3.02
75
70
65
GROWTH (%)
Last Qtr
-1.45
-7.90
-6.54
Revenues
Net Income
EPS
RETURN ON EQUITY (%)
WMT
Q4 2015
18.24
Q4 2014
19.88
Q4 2013
20.87
60
55
Rating History
BUY
Ind Avg
18.37
16.32
17.50
S&P 500
12.28
14.59
13.97
HOLD
Volume in Millions
200
100
2015
0
2016
COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History
P/E COMPARISON
RECOMMENDATION
We rate WAL-MART STORES INC (WMT) a BUY. This is driven by a few notable strengths, which we believe
should have a greater impact than any weaknesses, and should give investors a better performance
opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its
attractive valuation levels and largely solid financial position with reasonable debt levels by most measures.
We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per
share.
14.52
19.65
21.31
WMT
Ind Avg
S&P 500
HIGHLIGHTS
The debt-to-equity ratio is somewhat low, currently at 0.62, and is less than that of the industry average,
implying that there has been a relatively successful effort in the management of debt levels. Even though the
company has a strong debt-to-equity ratio, the quick ratio of 0.22 is very weak and demonstrates a lack of
ability to pay short-term obligations.
EPS ANALYSIS¹ ($)
2013
2014
Q4 1.43
Q3 1.03
Q2 1.08
Q1 1.03
Q4 1.53
Q3 1.15
Q2 1.21
Q1 1.10
Q4 1.34
Q3 1.14
Q2 1.24
Q1 1.14
Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.6%.
Since the same quarter one year prior, revenues slightly dropped by 1.4%. The declining revenue appears to
have seeped down to the company's bottom line, decreasing earnings per share.
The change in net income from the same quarter one year ago has exceeded that of the S&P 500 and the
Food & Staples Retailing industry average. The net income has decreased by 7.9% when compared to the
same quarter one year ago, dropping from $4,966.00 million to $4,574.00 million.
2015
NA = not available NM = not meaningful
1 Compustat fiscal year convention is used for all fundamental
data items.
The gross profit margin for WAL-MART STORES INC is currently lower than what is desirable, coming in at
27.07%. Regardless of WMT's low profit margin, it has managed to increase from the same period last year.
Despite the mixed results of the gross profit margin, WMT's net profit margin of 3.52% compares favorably to
the industry average.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: March 1, 2016
PAGE 1
March 1, 2016
NYSE: WMT
WAL-MART STORES INC
Sector: Consumer Non-Discretionary Hypermarkets & Super Centers Source: S&P
Annual Dividend Rate
$1.96
Annual Dividend Yield
2.95%
PEER GROUP ANALYSIS
15%
REVENUE GROWTH AND EBITDA MARGIN*
RAD
PSMT
V
FA
AB
OR
WMT
IMKTA
CASY
R
VO
FA
LE
AB
-30%
UN
Revenue Growth (TTM)
CNCO
CBD
2%
10%
EBITDA Margin (TTM)
Companies with higher EBITDA margins and
revenue growth rates are outperforming companies
with lower EBITDA margins and revenue growth
rates. Companies for this scatter plot have a market
capitalization between $470.3 Million and $212.4
Billion. Companies with NA or NM values do not
appear.
*EBITDA – Earnings Before Interest, Taxes, Depreciation and
Amortization.
15%
REVENUE GROWTH AND EARNINGS YIELD
PSMT
RAD
V
FA
CVS
LE
WMT
CASY
R
VO
FA
LE
AB
-30%
UN
Revenue Growth (TTM)
Price as of 2/29/2016
$66.34
INDUSTRY ANALYSIS
Food and staples retailing is the second largest segment of the consumer staples industry and includes
wholesale food distribution, grocery retaining, specialty food stores, and drugstores. Major players are
Wal-Mart Stores (WMT), CVS Caremark (CVS), Walgreen Co (WAG), Sysco (SYY), Kroger (KR), Supervalu
(SVU), Safeway (SWY), and Whole Foods Market (WFM), all of which possess unique operational models. The
industry is defensive and characterized by stable growth.
Demand for basic products remains stable regardless of economic conditions. Commodity pricing pressures
are being offset by corporate restructurings, which are helping to maintain margins. During periods of weak
growth, the industry tends to outperform.
The Food and Drug Administration (FDA) is the regulatory body for food manufacturers and drug retailers.
Regulation begins at the initial phases of development and continues through the manufacturing phase and
down the supply chain. Law makers are considering legislation to prohibit Canadian pharmacies from selling
prescription drugs to US mail-order customers in order to help domestic pharmacies. Prescription drugs
account for approximately 10% of the total US medical bill. Also, Medicare favors generic drugs and in doing
so influences industry participants.
In the wake of our recent recession, consumer preference has shifted towards cost-effective choices such
as discount groceries. Lifestyle drugs have been hit hardest. However, baby boomers are now propelling
growth in the drugstore segment, which is expected to expand within the consumer staples industry.
Increased pharmacy traffic is not necessarily a profit driver, but it triggers impulse purchase of general
merchandise and services.
The industry’s dependable revenue and low beta are commendable during an economic recession, but two
factors will curtail long-run performance, rising raw material costs and high valuations. Food and staples
retailing remains a stable business, but demand for food products is limited by the small annual US population
growth.
PEER GROUP: Food & Staples Retailing
IMKTA
ANDE CNCO
-5%
52-Week Range
$56.30-$84.16
AB
OR
KR
COST
Market Capitalization
$212.4 Billion
Food distributors maintain a specific product mix. Grocery stores are usually locally owned and have a fixed
client base. They record average annual revenue of $14 million. Supermarkets rely on a distribution network
to survive as they do not have enough space to store goods. Specialty stores use merchandising to attract
foot traffic. Drugstores focus on prescription customers and sell over-the-counter (OTC) drugs, health and
beauty aids, greeting cards, photo-finishing services, and general merchandise.
LE
COST KR
CVS
Beta
0.20
CBD
25%
Earnings Yield (TTM)
Companies that exhibit both a high earnings yield
and high revenue growth are generally more
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between -25.7% and
11.6%. Companies with NA or NM values do not
appear.
Ticker
WMT
RAD
ANDE
COST
CNCO
IMKTA
CASY
KR
PSMT
CBD
CVS
Company Name
WAL-MART STORES INC
RITE AID CORP
ANDERSONS INC
COSTCO WHOLESALE CORP
CENCOSUD SA
INGLES MARKETS INC
CASEYS GENERAL STORES INC
KROGER CO
PRICESMART INC
CIA BRASILEIRA DE DISTRIB
CVS HEALTH CORP
Recent
Price ($)
66.34
7.95
26.85
150.03
6.57
33.73
105.57
39.91
77.26
10.49
97.17
Market
Cap ($M)
212,414
8,319
773
65,980
6,195
470
4,118
38,901
2,347
1,742
106,740
Price/
Earnings
14.52
4.21
NM
28.10
34.58
11.92
18.75
19.81
25.33
12.34
20.99
Net Sales
TTM ($M)
482,130.00
29,314.45
4,198.50
116,553.00
16,392.42
3,765.26
7,299.01
108,872.00
2,858.31
18,427.60
153,290.00
Net Income
TTM ($M)
14,694.00
1,934.88
-13.07
2,361.00
184.87
57.29
221.50
1,998.00
92.15
219.66
5,237.00
The peer group comparison is based on Major Hypermarkets & Super Centers companies of comparable size.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: March 1, 2016
PAGE 2
March 1, 2016
NYSE: WMT
WAL-MART STORES INC
Sector: Consumer Non-Discretionary Hypermarkets & Super Centers Source: S&P
Annual Dividend Rate
$1.96
Annual Dividend Yield
2.95%
Beta
0.20
Market Capitalization
$212.4 Billion
52-Week Range
$56.30-$84.16
Price as of 2/29/2016
$66.34
COMPANY DESCRIPTION
Wal-Mart Stores, Inc. operates retail stores in various
formats worldwide. The company operates through three
segments: Walmart U.S., Walmart International, and
Sam's Club. It operates discount stores, supermarkets,
supercenters, hypermarkets, warehouse clubs, cash and
carry stores, home improvement stores, specialty
electronics stores, restaurants, apparel stores, drug
stores, and convenience stores, as well as retail
Websites, such as walmart.com and samsclub.com. The
company's stores offer meat, produce, deli, bakery, dairy,
frozen foods, alcoholic and nonalcoholic beverages, and
floral and dry grocery; health and beauty aids, baby
products, household chemicals, paper goods, and pet
supplies; electronics, toys, cameras and supplies, photo
processing services, cellular phones, cellular service plan
contracts and prepaid services, movies, music, video
games, and books; and pharmacy, optical,
over-the-counter drugs, and clinical services. Its
merchandise also include stationery, automotive
accessories, hardware and paint, sporting goods, fabrics
and crafts, and seasonal merchandise; apparel for
women, girls, men, boys, and infants, as well as shoes,
jewelry, and accessories; and home furnishings,
housewares and small appliances, bedding, home decor,
outdoor living, and horticulture products. The company
also provides financial services and related products,
including money orders, prepaid cards, wire transfers,
money transfers, check cashing, and bill payment. In
addition, it offers brand name merchandise, including
hardgoods, softgoods, and selected private-label items,
such as Member's Mark and its own proprietary brands,
such as Daily Chef and Simply Right. Further, the
company operates banks that provide consumer
financing programs. As of January 15, 2016, it operated
11,600 stores under 72 banners in 28 countries and
eCommerce Websites in 11 countries. The company was
founded in 1945 and is headquartered in Bentonville,
Arkansas.
STOCK-AT-A-GLANCE
Below is a summary of the major fundamental and technical factors we consider when determining our
overall recommendation of WMT shares. It is provided in order to give you a deeper understanding of our
rating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
understanding of our stance on the stock, these factors must be assessed in combination with the stock’s
valuation. Please refer to our Valuation section on page 5 for further information.
WAL-MART STORES INC
702 SW 8th Street
Bentonville, AR 72716
USA
Phone: 479-273-4000
http://www.walmart.com
THESTREET RATINGS RESEARCH METHODOLOGY
FACTOR
SCORE
3.5
Growth
out of 5 stars
weak
Measures the growth of both the company's income statement and
cash flow. On this factor, WMT has a growth score better than 60% of
the stocks we rate.
strong
3.0
Total Return
out of 5 stars
weak
Measures the historical price movement of the stock. The stock
performance of this company has beaten 50% of the companies we
cover.
strong
4.5
Efficiency
out of 5 stars
weak
Measures the strength and historic growth of a company's return on
invested capital. The company has generated more income per dollar of
capital than 80% of the companies we review.
strong
4.0
Price volatility
out of 5 stars
weak
Measures the volatility of the company's stock price historically. The
stock is less volatile than 70% of the stocks we monitor.
strong
5.0
Solvency
out of 5 stars
weak
Measures the solvency of the company based on several ratios. The
company is more solvent than 90% of the companies we analyze.
strong
4.0
Income
out of 5 stars
weak
Measures dividend yield and payouts to shareholders. The company's
dividend is higher than 70% of the companies we track.
strong
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.
Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: March 1, 2016
PAGE 3
March 1, 2016
NYSE: WMT
WAL-MART STORES INC
Sector: Consumer Non-Discretionary Hypermarkets & Super Centers Source: S&P
Annual Dividend Rate
$1.96
Annual Dividend Yield
2.95%
Consensus EPS Estimates² ($)
IBES consensus estimates are provided by Thomson Financial
0.88
4.14 E
4.30 E
Q1 FY16
2017(E)
2018(E)
Market Capitalization
$212.4 Billion
52-Week Range
$56.30-$84.16
Price as of 2/29/2016
$66.34
FINANCIAL ANALYSIS
WAL-MART STORES INC's gross profit margin for the fourth quarter of its fiscal year 2015 is essentially
unchanged when compared to the same period a year ago. Sales and net income have dropped, however the
growth has outpaced the average competitor within the industry. WAL-MART STORES INC has very weak
liquidity. Currently, the Quick Ratio is 0.22 which clearly shows a lack of ability to cover short-term cash
needs. The company's liquidity decreased from the same period a year ago, despite already having very weak
liquidity to begin with. This would indicate deteriorating cash flow.
During the same period, stockholders' equity ("net worth") has remained virtually unchanged only decreasing
by 1.04% from the same quarter last year. The key liquidity measurements indicate that the company is in a
position in which financial difficulties could develop in the near future.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
next 12-months. To learn more visit www.TheStreetRatings.com.
INCOME STATEMENT
Net Sales ($mil)
EBITDA ($mil)
EBIT ($mil)
Net Income ($mil)
Beta
0.20
Q4 FY15
129,667.00
9,073.00
6,642.00
4,574.00
Q4 FY14
131,565.00
10,526.00
8,234.00
4,966.00
Q4 FY15
8,705.00
199,581.00
50,034.00
80,546.00
Q4 FY14
9,135.00
203,706.00
50,381.00
81,394.00
Q4 FY15
27.07%
6.99%
5.12%
2.42
7.36%
18.24%
Q4 FY14
26.41%
8.00%
6.26%
2.38
8.03%
19.88%
Q4 FY15
0.93
0.38
NA
NA
Q4 FY14
0.97
0.38
636.00
12.95
Q4 FY15
3,170
0.49
1.43
25.41
NA
12,362,761
Q4 FY14
3,228
0.48
1.53
25.22
NA
12,064,526
BALANCE SHEET
Cash & Equiv. ($mil)
Total Assets ($mil)
Total Debt ($mil)
Equity ($mil)
PROFITABILITY
Gross Profit Margin
EBITDA Margin
Operating Margin
Sales Turnover
Return on Assets
Return on Equity
DEBT
Current Ratio
Debt/Capital
Interest Expense
Interest Coverage
SHARE DATA
Shares outstanding (mil)
Div / share
EPS
Book value / share
Institutional Own %
Avg Daily Volume
2 Sum of quarterly figures may not match annual estimates due to
use of median consensus estimates.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: March 1, 2016
PAGE 4
March 1, 2016
NYSE: WMT
WAL-MART STORES INC
Sector: Consumer Non-Discretionary Hypermarkets & Super Centers Source: S&P
Annual Dividend Rate
$1.96
Annual Dividend Yield
2.95%
RATINGS HISTORY
Our rating for WAL-MART STORES INC was
recently upgraded from Hold to Buy on 2/23/2016.
As of 2/29/2016, the stock was trading at a price of
$66.34 which is 21.2% below its 52-week high of
$84.16 and 17.8% above its 52-week low of $56.30.
BUY: $66.48
HOLD: $64.47
BUY: $74.70
2 Year Chart
Price/Earnings
$70
1
2
3
premium
5
1
2
3
4
5
Price reflects the closing price as of the date listed, if available
RATINGS DEFINITIONS &
DISTRIBUTION OF THESTREET RATINGS
Price/Book
32.34% Buy - We believe that this stock has the
opportunity to appreciate and produce a total return of
more than 10% over the next 12 months.
34.97% Hold - We do not believe this stock offers
conclusive evidence to warrant the purchase or sale of
shares at this time and that its likelihood of positive total
return is roughly in balance with the risk of loss.
32.69% Sell - We believe that this stock is likely to
decline by more than 10% over the next 12 months, with
the risk involved too great to compensate for any
possible returns.
TheStreet Ratings
14 Wall Street, 15th Floor
New York, NY 10005
www.thestreet.com
Research Contact: 212-321-5381
Sales Contact: 866-321-8726
1
2
3
premium
4
5
1
2
premium
3
4
5
3
4
5
discount
WMT 7.68
Peers 11.63
• Discount. The P/CF ratio, a stock’s price divided by
the company's cash flow from operations, is useful
for comparing companies with different capital
requirements or financing structures.
• WMT is trading at a significant discount to its
peers.
Price to Earnings/Growth
1
2
3
premium
4
5
discount
WMT NM
Peers 3.73
• Neutral. The PEG ratio is the stock’s P/E divided by
the consensus estimate of long-term earnings
growth. Faster growth can justify higher price
multiples.
• WMT's negative PEG ratio makes this valuation
measure meaningless.
Earnings Growth
1
2
3
4
lower
5
higher
WMT -8.42
Peers 23.65
• Lower. Elevated earnings growth rates can lead to
capital appreciation and justify higher
price-to-earnings ratios.
• However, WMT is expected to significantly trail its
peers on the basis of its earnings growth rate.
Sales Growth
discount
WMT 0.44
Peers 0.55
• Discount. In the absence of P/E and P/B multiples,
the price-to-sales ratio can display the value
investors are placing on each dollar of sales.
• WMT is trading at a discount to its industry on this
measurement.
2
premium
discount
WMT 2.61
Peers 3.69
• Discount. A lower price-to-book ratio makes a
stock more attractive to investors seeking stocks
with lower market values per dollar of equity on the
balance sheet.
• WMT is trading at a significant discount to its
peers.
Price/Sales
1
Price/CashFlow
discount
WMT 15.45
Peers 19.03
• Discount. A lower price-to-projected earnings ratio
than its peers can signify a less expensive stock or
lower future growth expectations.
• WMT is trading at a discount to its peers.
(as of 2/29/2016)
Price as of 2/29/2016
$66.34
discount
premium
To
Buy
Hold
Buy
4
WMT 14.52
Peers 19.65
• Discount. A lower P/E ratio than its peers can
signify a less expensive stock or lower growth
expectations.
• WMT is trading at a significant discount to its
peers.
Price/Projected Earnings
From
Hold
Buy
Buy
52-Week Range
$56.30-$84.16
VALUATION
BUY. This stock's P/E ratio indicates a discount compared to an average of 19.65 for the Food & Staples
Retailing industry and a discount compared to the S&P 500 average of 21.31. To use another comparison, its
price-to-book ratio of 2.61 indicates valuation on par with the S&P 500 average of 2.53 and a discount versus
the industry average of 3.69. The current price-to-sales ratio is well below the S&P 500 average and is also
below the industry average, indicating a discount. Upon assessment of these and other key valuation criteria,
WAL-MART STORES INC proves to trade at a discount to investment alternatives within the industry.
$80
2015
MOST RECENT RATINGS CHANGES
Date
Price
Action
2/23/16
$66.48
Upgrade
9/17/15
$64.47 Downgrade
2/28/14
$74.70 No Change
Market Capitalization
$212.4 Billion
$90
$60
2014
Beta
0.20
1
2
3
lower
4
5
higher
WMT -0.73
Peers 9.36
• Lower. A sales growth rate that trails the industry
implies that a company is losing market share.
• WMT significantly trails its peers on the basis of
sales growth
DISCLAIMER:
The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but
TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided
via the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as
other third-party data providers.
TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided
for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or
other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a
qualified securities professional, before you make any investment. None of the information contained in this report constitutes,
or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a
determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of
the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the
investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at
http://www.thestreet.com/static/about/terms-of-use.html.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: March 1, 2016
PAGE 5