...This paper is examining Wal-Mart Stores, Inc. and analyzing the value of its stock to make a buy/sell recommendation. The valuation is based on a variety of techniques to price the shares and then compare the intrinsic value with the currently trading market price: Dividend Discount model, CAPM, Three-Stage Approach and the Price/Earnings Multiple Approach. Executive Summary Founded by Sam Walton, Wal-Mart is the largest retailer in the world providing a huge assortment of merchandise, electronics, hardware and groceries at “everyday low prices”. 2010 Wal-Mart’s net sales were more than $405US billion. Wal-Mart had an initial stock price of $16.50/share in 1970. Since then Wal-Mart’s dividend went up to $1.09/share in 2010 after it had undergone 11 two-for-one stock splits. Wal-Mart’s recent closing price was $53.48. According to Bloomberg, Wal-Mart’s stock were ranked as “buys’ by 20 analyst – can we justify this recommendation or does our valuation have a different outcome? Valuation: Utilizing the DDM, the current stock price of Wal-Mart is equal to the PV of all expected future dividends discounted at an investor’s required or expected rate of return: The case provides a consensus annual Wal-Mart dividend for 2011 of $1.21(D1) and an expected constant dividend growth of ≈5.0% (g). To calculate the current price (Po), we need to come up with (Ke). Since we do not have the investor’s required rate of return we can use the CAPM to calculate an expected rate of return. The...
Words: 1301 - Pages: 6
...Case Analysis – Wal-Mart Wal-Mart was set up in 1962 in the US state of Arkansas by Sam Walton. Before opening Wal-Mart, Walton operated a franchise of the Ben Franklin variety store in Newport. His retail ventures proved quite successful, and most of the success came from his innovative business ideas. He3 bought products in bulk directly from manufacturers and offered them at lower prices to customers, which allowed him to gain a significant advantage over the competition. Walton also kept the stores open for longer hours than its competitors. Wal-Mart’s USP was providing a large variety of merchandise at low pries. Walton’s main focus was on establishing new stores in small towns. In 1977 Wal-Mart made its first acquisition by buying 16 Mohr value stores in Michigan and Illinois. He later purchased a shoe company and set up pharmacy and jewelry divisions and auto service centers. By 1980, Wal-Mart had 276 stores with annual sales of $1.4 billion and by 1984 the number of stores had increased to 640 with annual sales of $4.5 billon. In 1999 Wal-Mart became the largest private employer in the US. By 2005, Wal-Mart had presence in Argentina, brazil, canaada,china and 15 other countries including the UK. In November 2006, Wal-Mart announced that it had tied up with Bharti Enterprises to make its long expected foray into the Indian retail sector. By then Wal-Mart has already become the biggest retail chain and the second largest company in the world in terms of...
Words: 967 - Pages: 4
...S VALUING WAL-MART STOCK1 w 906N09 Professor Stephen R. Foerster prepared this case solely to provide material for class discussion. The author does not intend to illustrate either effective or ineffective handling of a managerial situation. The author may have disguised certain names and other identifying information to protect confidentiality. Ivey Management Services prohibits any form of reproduction, storage or transmittal without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Management Services, c/o Richard Ivey School of Business, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca. Copyright © 2006, Ivey Management Services Version: (A) 2009-09-23 In early January 2006, Rachel Martin was examining Wal-Mart Stores, Inc. (Wal-Mart) stock and its valuation. As an investment advisor with a major brokerage firm, Martin gave investment suggestions and helped clients manage their portfolios. Some of her clients had Wal-Mart stock in their portfolios, and Martin wondered whether to recommend the stock to any of her new clients or to existing clients who did not currently have Wal-Mart in their portfolios. BACKGROUND OF WAL-MART STORES, INC. Based in Bentonville, Arkansas, and founded by the legendary Sam Walton...
Words: 5056 - Pages: 21
...Wal-Mart Inc. Ethical Treatment of Employees Prepared for Wal-Mart Corporation Prepared by Alexander W. Nash April 26, 2011 Table of Contents EXECUTIVE SUMMARYiii INTRODUCTION1 ANALYSIS OF WAL-MART’S ETHICAL TREATMENT OF EMPLOYEES 2 THE COMPANY: WAL-MART INC.2 THE PRACTICE: ETHICAL TREATMENT OF EMPLOYEES 2 WAL-MART’S ETHCIAL TREATMENT OF EMPLOYEES3 RECOMENDATIONS5 EVEN PAY SCALE 5 MORE ACCOUNTABILITY5 CHINA’S LABOR LAWS AND CONDITIONS 6 CONCLUSION6 Executive Summary Wal-Mart is one of the biggest empires in the world. It dominates many markets by providing many different products for the lowest prices guaranteed. You can’t go anywhere without seeing a Wal-Mart, which has more revenue than the entire workforce of Utah. It has revolutionized the world or commerce, through implementing state of the art inventory tracking systems and mastering logistics. Many argue that it has become so successful and powerful from being unethical with its employees. Wal-Mart is currently involved in the largest job discrimination class action lawsuit in U.S. history affecting about 1.5 million women. Wal-Mart also has lawsuits concerning wage and hour violations, executives also admitted to being told by superiors to not pay overtime. It continues to have problems with its labor force in china, forcing them to work seven days a week and paying them less than China’s minimum wage, and having employees work with dangerous chemicals without the “right to know”, as its...
Words: 3167 - Pages: 13
...Week 1 Lizette Martinez Kaplan University HR420: Employment law Sarah Scott November 12, 2012 Introduction The Pregnancy Discrimination Act (PDA) involves treating a woman an applicant or employee unfavorably because of pregnancy, childbirth, or medical condition related to pregnancy or childbirth. In 1978 congress amended title VII of the civil rights act of 1964 to enact the pregnancy discrimination based on pregnancy when it comes to any aspect of employment, including hiring, firing, pay, job assignments, promotions, layoff, training, fringe benefits, such as leave health insurance, and any other term or condition of employment. Pregnant woman are entitled to take disability leave or leave without pay just as an employer who is not pregnant; it is also illegal to harass or discriminate towards a pregnant woman. Pregnant employees may also have additional rights under the family and medical leave act (U.S. Equal Employment Opportunity Commission). What happened in the case? Provide a summary of what were the organization’s actions that were not in compliance with an employment law. In this case a pregnancy discrimination lawsuit at a giant Arkansas took place. Wal-Mart had rejected a pregnant applicant. Wal-Mart refused to rehire Jamey Stern because she was pregnant. Jamey Stern was told by the assistant manager to come back after she had given birth. The business had violated Title VII of the civil rights act of 1964 by discriminating towards an employer because...
Words: 609 - Pages: 3
...9-387-018 REV: APRIL 12, 2007 PANKAJ GHEMAWAT Wal-Mart Stores’ Discount Operations In October 1985, Forbes declared Sam Walton the richest person in the United States. With his four children, he owned stock worth $2.8 billion. That put him $1 billion ahead of the next person on the list, H. Ross Perot. By the end of April 1986, Walton’s net worth had swelled by another $1.6 billion. Walton’s fortune consisted of a 39% stake in Wal-Mart Stores, a retailer that had focused historically on the Sunbelt. Although Wal-Mart had begun to diversify into other areas, discounting still accounted for 91% of the company’s sales in 1985 and 96% of its pretax profits. Wal-Mart had consistently led other discounters in both profitability and growth. Exhibit 1 summarizes Wal-Mart’s history over the past decade; Exhibit 2 compares its performance with that of its competitors. As a result of such comparisons, Wal-Mart’s market value in early 1986 was twice K mart’s, even though it was only a third as large. Analysts thought that Wal-Mart would overtake K mart as the largest discounter by the turn of the century, but they were divided over whether Wal-Mart stock remained a good buy at a price-earnings multiple of 26. This case describes discount retailing and the distinctive features of Wal-Mart’s discount operations. It also sketches the areas into which Wal-Mart was diversifying in the mid-1980s. Discount Retailing Discount stores emerged in the United States in the mid-1950s...
Words: 1501 - Pages: 7
...WAL-MART'S SUPPLY CHAIN MANAGEMENT PRACTICES Do No tC op y OPER - 020 This case was written by P. Mohan Chandran, under the direction of Vivek Gupta, ICFAI Center for Management Research (ICMR). It is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources. 2003, ICFAI Center for Management Research. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means – electronic or mechanical, without permission. To order copies, call 0091-40-2343-0462/63/64 or write to ICFAI Center for Management Research, Plot # 49, Nagarjuna Hills, Hyderabad 500 082, India or email icmr@icfai.org. Website: www.icmrindia.org OPER/020 WAL-MART'S SUPPLY CHAIN MANAGEMENT PRACTICES “When you start to collapse the supply chain, accuracy in execution becomes critical. Any lack of accurate information and processes creates costly bottlenecks in the flow of goods and materials.” -- Bruce Richmond, Global head, Andersen Consulting. y INTRODUCTION tC op The US-based Wal-Mart ranked first in the global Fortune 500 list in the financial year 2001-02 earning revenues of $219.81 billion (Refer Table I). Wal-Mart was the largest retailing company in the world. The company was much bigger than its competitors in the US –...
Words: 6415 - Pages: 26
...Retailing Spring 2015 Case 1: Wal-Mart’s Wage Hike As discussed in class a few weeks ago, Wal-Mart announced a sweeping wage hike. Some are calling this the revolution of minimum wage, others refer to it as a pitiful and costly PR attempt, and yet some say it will have no bearing on society or the company at all. In your opinion, how will this wage increase affect the retail giant’s retail strategy? How will it affect their retail mix? Do you feel this is a positive move for the company? For the workers? For the economy? Do you agree with Wal-Mart’s decision to increase the bottom-tier worker wages? Be sure to explain your opinion in detail and to utilize outside research to support your views. You should reference at least 5 sources in addition to the links I have provided below. This case should be approximately 5 pages, double spaced, with in text citation, and no greater than size 12 font and no more than 1 inch margins. (I do not usually specify but after some of those SWOT cases I feel the need to be very detailed.) Some articles and an interesting blog to get you started: “Exclusive: U.S. minimum wage hikes to affect 1,400-plus Walmart stores” By Nathan Layne; 12/24/14 http://www.reuters.com/article/2014/12/24/us-walmart-wages-idUSKBN0K20AE20141224 “Walmart's wage hike gets CEOs' attention” By Matt Krantz 2/26/15 http://americasmarkets.usatoday.com/2015/02/26/retail-ceos-dish-on-wal-marts-pay-raise/ Blog by Daniel Gross on 3/9/15 “Inside Wal-Mart’s...
Words: 307 - Pages: 2
...! ! ! ! ! ! ! ! ! ! ! ! !!!!!!!!!!! ! ! Did Wal-Mart Wake Up? How Strategic Management Handled Wal-Mart’s Reputation [ABSTRACT] The nation’s largest private corporation and retail giant Wal-Mart has faced multiple opposition from labor unions, grassroots organizations, religious groups, and even from its own employees, impacting its corporate reputation and ultimately its bottom line. This case study will demonstrate the strategic communication Wal-Mart used for its corporate reputation management (CRM). In particular, the case describes the company’s response to criticism regarding its current business policies and practices. Table of Contents Introduction………………………………………………………………3 1. Company History……………………………………………………..5 1.1 Wal-Mart’s Early History: 1960s to 1970s…………………………….5 1.2 Wal-Mart Expands and Goes International: 1980s to 1990s…………...6 1.3 Attack of the Advocacy Groups: 2000 to present……………………....7 1.4 Repercussions…………………………………………………………...8 2. The Issue: Employee Relations and Workers’ Rights…………………9 3. Opposition…………………………………………………………….10 3.1 Labor Union-Funded Groups…………………………………………...11 3.2 Gender Discrimination………………………………………………….12 3.3 Wal-Mart: The High Cost of Low Price……………………………………..13 4. Wal-Mart’s Response……………………………………………………15 4.1 Response to Labor Union-Backer Groups………………………………...16 4.2 Response to Gender Discrimination Lawsuit……………………………..17 4.3 Response to Greenwald’s Film……………………………………………18 4.4 Wal-Marting Across America:...
Words: 18260 - Pages: 74
...! ! ! ! ! ! ! ! ! ! ! ! !!!!!!!!!!! ! ! Did Wal-Mart Wake Up? How Strategic Management Handled Wal-Mart’s Reputation [ABSTRACT] The nation’s largest private corporation and retail giant Wal-Mart has faced multiple opposition from labor unions, grassroots organizations, religious groups, and even from its own employees, impacting its corporate reputation and ultimately its bottom line. This case study will demonstrate the strategic communication Wal-Mart used for its corporate reputation management (CRM). In particular, the case describes the company’s response to criticism regarding its current business policies and practices. Table of Contents Introduction………………………………………………………………3 1. Company History……………………………………………………..5 1.1 Wal-Mart’s Early History: 1960s to 1970s…………………………….5 1.2 Wal-Mart Expands and Goes International: 1980s to 1990s…………...6 1.3 Attack of the Advocacy Groups: 2000 to present……………………....7 1.4 Repercussions…………………………………………………………...8 2. The Issue: Employee Relations and Workers’ Rights…………………9 3. Opposition…………………………………………………………….10 3.1 Labor Union-Funded Groups…………………………………………...11 3.2 Gender Discrimination………………………………………………….12 3.3 Wal-Mart: The High Cost of Low Price……………………………………..13 4. Wal-Mart’s Response……………………………………………………15 4.1 Response to Labor Union-Backer Groups………………………………...16 4.2 Response to Gender Discrimination Lawsuit……………………………..17 4.3 Response to Greenwald’s Film……………………………………………18 4.4 Wal-Marting Across America:...
Words: 18508 - Pages: 75
...! ! ! ! ! ! ! ! ! ! ! ! !!!!!!!!!!! ! ! Did Wal-Mart Wake Up? How Strategic Management Handled Wal-Mart’s Reputation [ABSTRACT] The nation’s largest private corporation and retail giant Wal-Mart has faced multiple opposition from labor unions, grassroots organizations, religious groups, and even from its own employees, impacting its corporate reputation and ultimately its bottom line. This case study will demonstrate the strategic communication Wal-Mart used for its corporate reputation management (CRM). In particular, the case describes the company’s response to criticism regarding its current business policies and practices. Table of Contents Introduction………………………………………………………………3 1. Company History……………………………………………………..5 1.1 Wal-Mart’s Early History: 1960s to 1970s…………………………….5 1.2 Wal-Mart Expands and Goes International: 1980s to 1990s…………...6 1.3 Attack of the Advocacy Groups: 2000 to present……………………....7 1.4 Repercussions…………………………………………………………...8 2. The Issue: Employee Relations and Workers’ Rights…………………9 3. Opposition…………………………………………………………….10 3.1 Labor Union-Funded Groups…………………………………………...11 3.2 Gender Discrimination………………………………………………….12 3.3 Wal-Mart: The High Cost of Low Price……………………………………..13 4. Wal-Mart’s Response……………………………………………………15 4.1 Response to Labor Union-Backer Groups………………………………...16 4.2 Response to Gender Discrimination Lawsuit……………………………..17 4.3 Response to Greenwald’s Film……………………………………………18 4.4 Wal-Marting Across America:...
Words: 18260 - Pages: 74
...Wal-Mart Stores: One Step Ahead of the Rest I Parties In 1962, Sam Walton and his wife, Helen, opened the first Wal-Mart in Rogers, Arkansas. The discount retailer proved to be a quick success as Walton opened 15 additional stores in the following 10 years. In 1972, in hope of raising more capital and further expanding his business, Walton had an initial public offering of Wal-Mart stock on the New York Stock Exchange. The IPO went extremely well and the corporate entity was able to raise enough capital to open up another 276 stores spanning 11 states. The retail giant continued its success and has now become one of the staple corporations of American history; operating 10,000 stores nationwide while serving 176 million customers annually. However, the path to success came with a few bumps in the road; Wal-Mart has been accused of treating female employees, in both management and hourly positions, unequally compared to their male coworkers. Betty Dukes, Patricia Surgeson, Christine Kwapnoski, Deborah Gunter, and Edith Arana are current and/or former Wal-Mart employees who are accusing their employer of sexual discrimination. Mrs. Dukes began her employment for Wal-Mart in 1994. In 1999, after 5 years of minor promotions and raises, she asked to be trained for a management position but was refused. Ms. Surgeson was hired by Wal-Mart in 1997 and received 2 promotions in her 4 years of employment. While bearing more responsibility, she didn’t receive an increase...
Words: 2855 - Pages: 12
...Arguments against FDI in Retail in India 1. Predatory Pricing With its incredibly deep pockets Wal-Mart will be able to sustain losses for many years till its immediate competition is wiped out. This is a normal predatory strategy used by large players to drive out small and dispersed competition. This entails job losses by the millions. 2. Labour Displacement Another factor is that it can only expand by destroying the traditional retail sector. Till such time we are in a position to create jobs on a large scale in manufacturing, it would make eminent sense that any policy that results in the elimination of jobs in the unorganised retail sector should be kept on hold. If we assume 40 mn adults in the retail sector, it would translate into around 160 million dependents using a 1:4 dependency ratio. Opening the retailing sector to FDI means dislocating millions from their occupation, and pushing a lot of families under the poverty line. Plus, one must not forget that the western concept of efficiency is maximizing output while minimizing the number of workers involved – which will only increase social tensions in a poor and yet developing country like India, where tens of millions are still seeking gainful employment. This dislocated and unemployed horde has to be accommodated somewhere else. Agriculture already employs nearly 60% of our total workforce, and is in dire need of shedding excess baggage. That leaves us with manufacturing as the only other alternative. With...
Words: 2372 - Pages: 10
...When Sam Walton opened the first Wal-Mart in Rogers, Arkansas in 1962, he never expected his discount store to ever become the nation’s No. 1 retailer. In May of 1971, after being officially incorporated as Wal-Mart Stores Inc., Wal-Mart began selling shares as a publicly-held company and its stock experienced its first 100% split, at a market price of $47. By 1990, Wal-Mart had become the nation’s No. 1 retailer and by the end of the decade, the largest private employer in the world, with 1.14 million associates. Soon after, H. Lee Scott Jr. was appointed as the third CEO of Wal-Mart Stores Inc. In 2005, Scott introduced the company’s new commitment to bring environmental sustainability into its business and passed his success onto his replacement as president and CEO, Mike Duke, on February 1, 2009. Today, Wal-Mart has 7,800 stores and club locations in 14 different markets, employing more than 2 million associates, and serving more than 176 million customers a year. Wal-Mart is a public corporation that runs a chain of large department stores. Three business subsidiaries comprise Wal-Mart’s operations: Wal-Mart Stores, Sam’s Club, and Wal-Mart International. The nine retail formats of the company include “supercenters, food and drug stores, general merchandise stores, bodegas (small markets), cash and carry stores, membership warehouse clubs, apparel stores, soft discount stores and restaurants” (p. 17). Studies show that the customer base for discount retailers has been...
Words: 2449 - Pages: 10
...Case Study: Wal-Mart Stores “Every Day Low Prices” In China Webster University INTB 5000 1 Webster University 2 Wal-Mart Stores “Every Day Low Prices” In China FACTS: First opened in Shenzhen on August 12, 1996 As of December 2007 94 stores in 51 cities Employs 43,000+ associates Serves around 5 million customers per week Transition from rural US to metro/urban in China Competitive analysis a core value of the company Shopping 1,500 items and price matching them through “Special Buy” Analysis Major pressure from the Chinese regional governments to centralize in high growth regions About-face by Chinese govt. on Shanghai is of interest Has major implications on Wal-Mart’s ability to provide infrastructure for stores Supply Chain Challenges Abound Tier 1 cities include Beijing – Tianjin, Shanghai, Guangzhou Tier 2 cities include Chengdu, Nanjing, Chongqing, & Wuhan Tier 3 cities include Changzho, Jinhua, Mianyang Webster University 3 Wal-Mart Stores “Every Day Low Prices” In China 7,058 Units 1.9 Million Associates 23 offices sourcing from 70 countries UK 340 Units Canada 292 Units Japan 393 Units US 4,103 Units Mexico 943 Units Central America 433 Units China 86 Units Trust-Mart 101 Units India JV –Aug 2007 Puerto Rico 54 Units Brazil 297 Units Argentina 16 Units Webster University 4 Wal-Mart Stores “Every Day Low Prices” In China Webster University 5 Wal-Mart Stores “Every Day...
Words: 1186 - Pages: 5
