Wal- Mart stock Analysis:

Wal-Mart, world’s largest retailer and public corporation in the world that was listed in the Fortune 500 list in 2014. It employs the largest number of people in the world with more than 2 million employees.  It has presence in more than 27 countries around the world with more than 11000 stores.

The retailer is known for its large variety of assortments of various products and categories. It is also known for its Everyday low pricing policy (EDLP) which ensures that customers get the best possible price. It has a high bargaining power over its vendors and uses efficient Inventory management and order placement system so that the items on the shelves are replaced as soon as they leave.

Recently Wal-Mart news came in when it announced that it is going to increase the penetration of organic food products in its retail outlets. It also mentioned that it is going to sell them at a price 25% lesser from its competitors. This might be a Blue ocean strategy opted by Wal-Mart because they are offering a new product which is of high quality and healthy and is priced at a discount.

Wal-Mart stock price, as of 11^th April 2014 is trading at $76.89 down 1.39% from last night’s closing price of $77.97. WMT stock has depreciated 2.29% since the start of 2014 but moving forward analysts expect it to appreciate 5.3% in the coming 12 months. Wal-Mart Earnings growth this year so far has been around 4% and analysts expect it to appreciate 8% in the next five years. Wal-Mart stock graph has been up and down due to the disappointing holiday sales

Since Wal-Mart is the biggest retailer of the world, its market cap is $248.3 billion which is the highest among its competitors. Its Earnings are also the highest among its competitors and due to this reason, WMT P/E multiple is trading at discount over all its competitors. Same is the case with its Revenues and Net income which are in much higher volumes.

Since 2011, the Wal-Mart Revenues have been increasing but at a decreasing rate. But due to their high operating costs every year, their Net income has declined despite the increase in Revenues. Their Earnings increased from year 2011-13 but in FY14, they have decreased due to increasing costs associated despite the rise in Revenues.

Recently, Wal-Mart sued Visa for charging high transaction fees which ended up in high costs for Wal-Mart. WMT accused Visa Inc. for taking advantage of its leading position in the market and dictating price.

An important ratio in determining Wal-Mart’s ability to perform is the coefficient of determination which is 21.8%. This means that out of 100% price movement of Wal-Mart, only 21.8% is due to the market movements. This means that the market risk for Wal-Mart is very low.

Wal-Mart also has a strong alpha intercept of 0.05%. This means that if S&P 500 gives 0% return, still Wal-Mart will be able to give a return of 0.05%.