Answer To: Term Paper (“Financial Report”) Each participant is expected to complete a term paper...
Sugandh answered on Apr 18 2021
27
Walmart Inc and Best Buy Inc
Student Name
Student Number
Course Name
Course Number
Date
Assignment Details
Contents
I. Introduction 3
II. Company Background 4
III. Company Analysis 4
Life-cycle stage of the product/service. 5
Growth rates of sales, EPS, Assets. 5
Position in the Industry 7
Recent issues on management, corporate governance. 8
Recent stock market activity; average trading volume; options or short activity; legal insider trading. 9
Number of Insider Trades 9
Number of Insider Shares Traded 10
Financial Position 12
Ratios analysis 18
Capital structure 19
Dividend policy for company/industry 20
Capital outlays and Research and Development 21
Cash per share 22
Risk and Discount Rate 22
Business Risk; Altman’s Z (e.g., creditguru.com) 23
Market risk implied in the company’s stock. 24
Comparables - PE, growth rates in EPS, PEG, M/B and Rate of Return of stock holders 25
Pricing Method 26
Target price and current fair value 26
Final recommendation. 27
V. Conclusion 28
References 29
I. Introduction
It is evident that the paper must contain the factor which defines the process of having a major where the purpose of the given paper along with the report will be defined under the financial analysis and will deal with a perspective which assures that the importance will be defined in a manner where the financial analysis is done. Along with a fact that the paper explains the following sections inn details which include the various general elements along with the financial position as well as the risk and the discount rate analysis. It provides the process of having the stock pricing and defines the research in more of a practical and a finding and conclusive manner. It is very important that the Walmart Inc and the Best Buy Inc will be compared and analysis will accordingly be done.
Wal-Mart INC
II. Company Background
The company selected is the Wal-Mart Inc which is known for the following details:-
The company is definitely an public oriented organization which was formulated in the financial year 1962 in the month of July the company is more than half century old. It was founded by the Sam Walton and has it headquarters at Bentonville, Arkansas, U.S. The company is known for its various retail stores which amounts to more than 11443.It serves in various areas which being the North America and Canada, it belongs the key people which being Greg Penner (Chairman) and Doug Mc Millon (President, CEO).
The company is known for it wide range of products which being from
Electronics Movies, music, and games, Home and furniture Home improvement, Clothing Footwear, Jewelry, Toys, Garden supplies, Health and beauty Pet supplies Sporting goods and fitness Auto Photo finishing Craft and party supplies Grocery.
III. Company Analysis
The company being more than 50 years old and therefore, it is evident that the company must be reflected on the various non financial as well as the financial factors which are reflected in the main headers which are pointed as below:-
Life-cycle stage of the product/service.
The company being a retail organization deals majorly in trading which explains the process of having four elements which being introduction, growth, maturity, and decline.
Introduction is the highly expensive stage as the fixed cost is the highest. The other stage is that of the growth which defines the process of being higher sales and higher amount volume along with the profits. Then the stage followed by the Wal-Mart products is in account of the maturity which is the peak of the services and the goods which can be utilized at its best. Then it is followed by a stage which accounts for the decline where again the products and services provide or starts dealing the losses and no value return.
(McMann, 2019).
Growth rates of sales, EPS, Assets.
This segment will explain the process in connection with the sales parameters, earning per share as well as the assets and its durability.
Growth Analysis is explained under the parameters as listed below:-
In terms with the sales analysis it is evident that the Wal-Mart will deal with measuring the growth in connection with the period along with the period comparison in terms with the growth and the concept of the net sales or revenue which being in connection with the comparable store and the club sales value. Looking at the data it is evident that the net sales has increased in connection with the last years and the sales are manageable mainly because of the online trading.
Wal-Mart Inc
2021
2020
2019
2018
Total Revenue
55,91,51,000
52,39,64,000
51,44,05,000
50,03,43,000
Growth Percentage
0.067155377
0.018582634
0.02810472
(Collis, Wu, , Koning, & Sun, 2018)
In terms with the Earning per share it is evident that the earning has doubled since 2017, however remains neutral since then without changing much. Mainly because it is derived in relation to equity balance and the number of shares.
Wal-Mart Inc
2021
2020
2019
2018
Total Revenue
5
5
2
3
Growth Percentage
0.044
1.192982456
-0.306990881
(Smith, 2019)
In terms with the assets and analysis it is evident that the company is growing in connection with the assets mainly because of the dominance of assets and stores, the assets are increasing as the stores and the furniture required for the established.
Wal-Mart Inc
2021
2020
2019
2018
Total Assets
25,24,96,000
23,64,95,000
21,92,95,000
20,45,22,000
Growth Percentage
0.067658936
0.078433161
0.072231838
(Collis, Wu, , Koning, & Sun, 2018)
Position in the Industry
The Company belongs to the retail industry , therefore, the dominance and the position is also described in that perspective only. The company is known and famous for trading each and everything in one single roof. In terms with understanding the current condition of the Wal-Mart it essential to understand the target audience is around 22 to 55 age group which is wide and serves all in larger ambit. On a current condition it is a need of the hour that the company drastically need a break through in the position strategy. As on date the company does not hold any market distinction and therefore, it position is deice.
On the more, the positioning is on a decline and to assure that it bonus back it is evident that the strategy must be worked in context to the most competitive price. The graph below explains the position as follows:-
The second yellow dot is which actually is the current market position of the company and therefore, Wal mart must work on asap basis to justify the position and the condition.
(Smith, & Crawford, 2019).
Recent issues on management, corporate governance.
As per the filled report of corporate governance the following pointers and issues which came in light which are listed as follows:-
· Walmart is currently running into news because of this reason mainly Walmart becomes largest U.S. vaccine provider to join push for digital vaccination credentials.
· The company has recent rolled on full time associates so that the opportunity can be created and the focus more on business and less on pandemic.
· The company has raised it dividend to $ 2.20 per share in lieu of the pandemic condition.
· The company along with the Sam Clubs is constantly works around the vaccine and the retail pharmacy program.
· Walmart Announces More Than $700 Million in Additional Associate Bonuses, Tops $2.8 Billion in Total Cash Bonuses to Associates in 2020
· The lawsuits is still on going on account of the lawsuits on pharmacy
· The other major news that the company will rise the salary of the employees considering the condition and the given situation of the pandemic for around 425000 workers.
· The company has removed the display of ammunition and guns in terms with the reducing the civil unrest.
· The company has a major move on account of the delivery expense where the minimum amount of the delivery has reduce by $ 35 which is a huge amount.
· KKR and Rakuten to Acquire Stakes in Seiyu from Walmart, Focus on Accelerating Digital Transformation of Japanese Retail.
(McMann, 2019).
Recent stock market activity; average trading volume; options or short activity; legal insider trading.
The Walmart Inc which trades under the Nasdaq which being the WMT, it explains the concept in a manner where the trading is done as follows:-
Number of Insider Trades
INSIDER TRADE
3 MONTHS
12 MONTHS
Number of Open Market Buys
22
66
Number of Sells
50
180
Total Insider Trades
72
246
Number of Insider Shares Traded
INSIDER TRADE
3 MONTHS
12 MONTHS
Number of Shares Bought
16,395,187
28,352,659
Number of Shares Sold
68,458,011
217,715,061
Total Shares Traded
84,853,198
246,067,720
Net Activity
(52,062,824)
(189,362,402)
(Walton, S , n.d)
The details of the trading can be explained in a manner which being explained as follows:-
Day's Range of the amount $ 139.71 – $ 140.96
52 Week Range analysis is explained as follows:- $ 117.01 - $ 153.66
Volume of the shares are explained as follows:- 7,645,674 shares
Avg. Volume of the shares are explained as follows:- 9,445,811 shares
Further in detail which explains the trading information
It explains the concept of the stock price history along with the share statistics along with the dividend splits.
52-Week Change 8.29%
S&P500 52-Week Change 48.25%
50-Day Moving Average 134.35
200-Day Moving Average 142.11
On the more, it is evident that the insiders will be reflected as follows:-
Percentage of the insiders = 49.63 Percent
Percentage of the institutions = 30.92 Percent
Shares Short and Shares Percentage Float = 13.72 Million
In terms with the 5 Year Average Dividend Yield which being around 2.18 per share on the more, the payout ratio = 45.47 percent.
On the more, the major holders can be explained as follows:-
49.63 Percent of the Shares Held by All Insider
30.90 Percent of Shares Held by Institutions
61.39 Percent of Float Held by Institutions
3,040 Number of Institutions Holding Shares
Financial Position
The research is done for understanding the Wal-Mart five financial analysis from the year 2021 to 2017, the company closes the books in the month of January and the details on major parameters can be explained as below :-
The tabular format along with the percent of growth in last five years makes all the segments and parameters evident and essential to understand that the company progress made on the major factor
Income Statement
2017
2018
2019
2020
2021
TTM
Gross Profit
$ 1,24,61,70,00,000.00
$ 1,26,94,70,00,000.00
$ 1,29,10,40,00,000.00
$ 1,29,35,90,00,000.00
$ 1,38,83,60,00,000.00
$ 1,38,83,60,00,000.00
Total Revenue
$ 4,85,87,30,00,000.00
$ 5,00,34,30,00,000.00
$ 5,14,40,50,00,000.00
$ 5,23,96,40,00,000.00
$ 5,59,15,10,00,000.00
$ 5,59,15,10,00,000.00
Total Operating Profit/Loss
$ 22,76,40,00,000.00
$ 20,43,70,00,000.00
$ 21,95,70,00,000.00
$ 20,56,80,00,000.00
$ 22,54,80,00,000.00
$ 22,54,80,00,000.00
Net Income from Continuing Operations
$ 14,29,30,00,000.00
$ 10,52,30,00,000.00
$ 7,17,90,00,000.00
$ 15,20,10,00,000.00
$ 13,70,60,00,000.00
$ 13,70,60,00,000.00
Total Dividend Per Share
$ 2.00
$ 2.04
$ 2.08
$ 2.12
$ 2.16
$ 2.16
Regular Dividend Per Share Calc
$ 2.00
$ 2.04
$ 2.08
$ 2.12
$ 2.16
$ 2.16
Basic EPS
$ 4.40
$ 3.29
$ 2.28
$ 5.22
$ 4.77
$ 4.77
Basic WASO
$ 3,10,10,00,000.00
$ 2,99,50,00,000.00
$ 2,92,90,00,000.00
$ 2,85,00,00,000.00
$ 2,83,10,00,000.00
$ 2,83,10,00,000.00
Growth Analysis
2017
2018
2019
2020
2021
Gross Profit
1.87%
1.70%
0.20%
7.33%
Total Revenue
2.98%
2.81%
1.86%
6.72%
Total Operating Profit/Loss
-10.22%
7.44%
-6.33%
9.63%
Net Income from Continuing Operations
-26.38%
-31.78%
111.74%
-9.83%
Total Dividend Per Share
2.00%
1.96%
1.92%
1.89%
Regular Dividend Per Share Calc
2.00%
1.96%
1.92%
1.89%
Basic...