...Wal-Mart Case Valuing Wal-Mart Stock Questions: 1. Assess the financial health of Wal-Mart based on an analysis of the financial statements. 2. Based on any additional available information (including annual reports and 10-K filings) assess the economic conditions (as of the time of the case), the industry key success factors and competitive situation, and Wal-Mart’s strengths and weaknesses. 3. Develop a pro forma income statement and balance sheet for Wal-Mart for the fiscal year ending January 31, 2006. Assume the following (in addition to information in the case): selling, general and administrative expenses at 17.3 percent of anticipated net sales; interest on debt at an average rate of four percent; similar number of shares outstanding as of January 31, 2005: similar prepaids, other assets, accrued liabilities, deferred taxes and minority interest as in 2005. State any other key assumptions. How profitable do you anticipate Wal-Mart will be? Will Wal-Mart need to increase its reliance on external borrowing? 4. Determine the intrinsic value of Wal-Mart (on a per share basis) using the dividend discount model (DDM). Assess the value based on three forms of the DDM: the constant growth version, an assessment based on three years of projected dividends and a projected future stock price, and the three-stage DDM. Clearly state any assumptions including an estimation of Wal-Mart investor required returns. 5. Determine the intrinsic value of Wal-Mart (on a per share basis)...
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...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...
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...2014 Graded case 1: Valuing Wal-Mart Read the case material (case 906N09) regarding Wal-Mart's stock. The situation described is that of early 2006. We'll first analyse Wal-Mart at that point in time, and later compare how the analysis made with data up to 2005 holds up 8 years later. Use the data provided in the case unless stated otherwise. If you want to use extra data, feel free to do so (it might be rewarded if it contributes to the quality of your answers!) but mention this explicitly, with reference to your source(s). Prepare a report (this will be handed in through Blackboard, the exact procedure will be posted there) that answers the following questions. Show your calculations in the report! I. Regarding the situation at the start of 2006: A.Value Wal-mart's stock using the dividend discount model. Include in your answer valuations based on the following assumptions: 1. constant growth of dividends; use the data in exhibit 3. 2. a multi-stage development of dividends (analogous to the three-stage approach by Bloomberg mentioned in the case) For both models, use both an 8% and a 9% discount rate. Comment on the differences. B. Assuming Wal-Mart (to be precise, its revenue) keeps growing at 13.7% a year, and the US economy grows at 3% a year, in which year would Wal-Mart be bigger than the US economy? (assume that the size of the US economy in 2006 was $ 12500 billion). What are the implications of this curious bit of information? C. Determine Wal-Mart's stockvalue using...
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...Mission Statement: Level 1 Founded in 1962, Wal-Mart has continued to uphold its mission statement of “Save Money. Live Better.” Wal-Mart shows commitment and appreciation to its customers by valuing them through everyday low prices. Customers can trust Wal-Mart because of their low price guarantee. Building a relationship with customers is an essential part of Wal-Mart’s mission because it allows them to meet their customers’ expectations and provide superior customer service. In return of the customer experience, all customers are encouraged to provide feedback to help improve elements Wal-Mart may lack, as well as provide positive feedback in regards to what they’re doing right. Wal-Mart stays true to its mission statement by continuously returning to the wisdom of their founder, Sam Walton: “If we work together, we’ll lower the cost of living for everyone…we’ll give the world an opportunity to see what it’s like to save and have a better life” (Farfan). Strategic Goals/Plans: Level 2 It’s important to Wal-Mart’s future as a business, to continue expanding its customer base, increase sales, and stay innovative. It’s no easy feat to achieve, but when Wal-Mart noticed an increase in white-collar consumers because of the recent economic downturn, they seized the opportunity to accommodate their new demographic by embarking on an aspiring U.S. store remodel program as part of its three-year strategic plan appropriately named, Project Impact. At the center of this new plan...
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...S w 9B11N004 VALUING WAL-MART - 20101 Cyrus Zahedi wrote this case under the supervision of Professor Jim Hatch solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission 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, Richard Ivey School of Business Foundation, 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 © 2011, Richard Ivey School of Business Foundation Version: 2011-03-15 In early February 2010, Sabrina Gupta, an investment advisor with a major brokerage firm, was examining Wal-Mart Stores, Inc. (Wal-Mart) stock and its valuation. Gupta 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, Wal-Mart was the world’s largest retailer, operating more than 8,400 stores worldwide...
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...Wal-Mart VS Target Group Analysis [Type the author name] 4/21/2013 [A group analysis of the two top retailers; Wal-Mart and Target. This paper will discuss the SWOT of both companies as well as give an in depth analysis of both companies as big competitors.] 1962 was the year of creation. That is when two great companies were founded, Target and Wal-Mart. Target opening saying it’s a “new idea in discount stores”. Wal-Mart was the retailer who “focused on helping customers and communities save money and live better”. The two companies opened with the same ideas in mind. Sam Walton opened Wal-Mart’s first store in Rogers, Arkansas while Target was opened in Roseville, Minnesota by the Dayton Company. Later that year Target opened three more stores in St. Louis Park, Crystal and Duluth, Minnesota. Over the years the companies have managed to create household names for themselves that have lasted for over 50 years. Target and Wal-Mart have many things about their companies in common, strategy isn’t one of them. These companies seem to take two different approaches and it works in both persons favor. They both are leaders in different aspects therefor making them great competitors. Wal-Mart has 3 different strategies. Focus strategy is usually defined as: focusing on offering products and services to a particular market segment or buyer group, within a segment of a product line, and/ or to a specific geographic market. The differentiation strategy is defined...
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...Companies all over the United States are becoming increasingly desperate when it comes to ways to reorganize their company and still deliver a low price for their customers. Companies like Wal-Mart do not have to drastically modify their structure to meet the demands of customers because of they have already become an ensign to others as an example of a successful relationship between company and patrons. This is likely due to the implementation of its own brand name goods and competitive prices. Wal-Mart has one of the most basic business structures in the retail market. The business organization has aided them in becoming one of the most influential businesses in the retail trade. Market Structure In 1962 Sam Walton introduced society to the first discount store; Wal-Mart. Walton could not have imagined that it would become the retail behemoth it has grown into today. One of the reasons for Wal-Mart’s success has to be contributed to the fact that the store has the ability to create a basic but extremely efficient business structure. Wal-Mart stores offer their customers a diversity of popular brands and then sell them at about 5-10% below the prices of competitors. This way of thinking cemented Sam Walton’s stores as an influential powerhouse in the retail field. Wal-Mart Stores can be viewed as having two different types of markets: one, an...
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...Associate Level Material Brien Thigpen Appendix D Contingency Theory of Leadership Description of work environment | Wal-Mart is a fortune 500 business that operates on many different levels. This company has several different levels of management that makes the company operate efficiently. From time to time some of the managers of Wal Mart have trouble approaching most of their employees. My opinion is because of the different ethnic backgrounds that come with such a huge company it can be difficult to verbalize what you want to say or what you want done because of what they might think. | In the table below, categorize different leadership approaches that could be used in the work environment you have described. Provide different suggestions for each of the four approaches to leadership. Directive approach | Supportive approach | By using a directive approach, you are providing guidance and training. This can be anything from work scheduling to maintaining clear work performance standards. Linking incentives directly to performance is also an approach worth trying to boost employee morale. Developing clear work rules and procedures can be essential for making any work environment successful. | Being friendly and approachable can be a hard thing to do on an everyday basis. There can be problems that affect a person attitude on a particular day. Showing concern for well being and needs of employees will show that you empathize with their situation...
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...Foi verificado que a cultura organizacional da rede Wal-Mart é baseada na simplicidade, ou seja, o modelo de administração da Wal-Mart é um modelo simplista que obteve sucesso e que perdura como filosofia cultura desde a sua criação. Entretanto, enganam-se aqueles que pensam que esse modelo foge aos métodos e técnicas da inteligência competitiva pelo fato de estar calcado numa administração simplista. É notória a utilização de diversas técnicas de inteligência competitiva associado ao modelo de administração da Wal-Mart. Wall-Mart 50th anniversary celebrations - 2012 First store in Rogers, Arkansas. About 6,000 shareholders and employees (including 2,000 from Wal-Mart’s international operations) gathered at the University of Arkansas’s Bud Walton Arena to be hosted by Chairman Rob Walton (son of the founder) and entertained by Justin Timberlake, Lionel Ritchie, Juanes, and Celine Dion. The “one big happy family” festive atmosphere typical of Wal-Mart events had been overshadowed by employee and shareholder disquiet over the Mexican bribery scandal that had erupted in April 2012 concerning payments by Wal-Mart Mexico On May 17, Wal-Mart had reported results for the first quarter of its financial year. Sales were up 8.6% on the previous year, operating income was up 8.3%, and return on equity for the 12-month period was 18.1%. The day before the shareholders’ meeting, Wal-Mart’s stock hit an all-time high. With 2.2 million employees, it was the world’s biggest private-sector...
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...Businesses all over the United States are aggressive to stay modest and are looking for ways to rearrange their business and still deliver for customers the best likely prices. Businesses such as Wal-Mart do not have to alter their construction to fit the stresses of customers because it previously proposals its patrons brand name items at inferior prices. Wal-Mart’s basic construction has aided make it an influential retail trade, and a place customer’s love. Market Structure Wal-Mart Stores Inc. unlocked its first reduction store in 1962, Sam Walton had no impression his commercial would be the achievement that it is nowadays. The aim for Wal-Mart’s achievement is their aptitude to create a rudimentary construction for their business. Wal-Mart offers a diversity of famous brands and vends them at about 5-10% economy than other shops. This makes Wal-Mart an influential power in the selling business. Wal-Mart Stores is careful an oligopoly market construction. Colander (2010) describes oligopoly as a market disorder in which vendors are so few that the movements of any one of them will substantially touch price and have a quantifiable influence on contestants. With their sustained achievement, Wal-Mart’s market structure could also be careful a monopolistic modest construction. Wal-Mart has all the physiognomies of a controlling inexpensive structure as labeled by Colander (2010), they have many sellers, offer separated products, and they...
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...Mid-term Project ‘’Sam Walton’’ Anakaren Merari Quintanilla Castillo 1525360 5Yi October 2, 2013 In this mid-term project, I will analyze an American entrepreneur born in Kingfisher, Oklahoma, known for founding two of the largest retail stores in the United States, Wal-Mart and Sam's. Speaking of business, no doubt that Sam Walton can teach us a lot, he managed to turn his junk shop, a small cotton town in northern Arkansas, in the mighty Wal-Mart the largest chain of small shops world. Sam Walton had a philosophy about ten rules, which abided, in order to become the successful businessman he was, and make Wal Mart in the company with which any entrepreneur dreams. The first is that the person engaged in the business. Believe in it more than anyone. It must pass each of the personal deficiencies for the simple passion for work. If not born with that passion, you can learn because you need it. If you like your job, you will devote every day, and will do in the best way, and before long everyone in their environment pick up on that passion, like a disease. The reason that Walton, who died at age 74 in 1992, was the most successful retailer in U.S. history 30 years after opening its first Wal-Mart is that he was also well ahead of its competitors by bringing efficiency and discipline to the world of retail. The cornerstone of the success of his company was selling products at the lowest possible price, something he could do to leave out the middlemen and bargain directly...
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...Walton, who had already plenty of experience in merchandising and retail. Under his initial leadership, Walmart expanded throughout the nation with its success blazing a trail for all to follow. Through Walton’s unique leadership traits, Walmart was also introduced in international markets, and several high scale achievements made the organization seem quite untouchable. The management and leadership styles utilized within the organization produced a corporate culture that was exemplified and went on to achieve success on a colossal scale, changing the entire landscape of retailing in America(Wal-Mart Retail Divisions, 2007). The organization was committed to valuing its customers and through effective leadership as well as management practices, Sam Walton was able to create a unique identity for Walmart, thus achieving his vision. Cost-cutting used to be one of the features of Wal-mart culture among employees, as everyone pitched in to ensure the company remained completely sincere to its customers and not spend the funds on their own. Walton would ensure that proper discipline in following business ethics were...
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...food discount stores in the United States. Its two reportable segments are and Credit Card and the reason for credit card this performs repeated customers. Cash earning is always on of the most important part of a company. To review more importantly, an investment in stock for the company helps to identify cash earning. Target is significantly below their historical average multiple of cash earning, do to the economy down ward. As Target continual to calculate their proprietary analysis this is incredibly important to understand that Target goal is to have a current level of cash earning this helps to purchase more product demand and supply. By logic Target looks very closely at revenue numbers as their second most important factor in valuing a company’s stock. Target has established reasonable Price to Sales per share ranges...
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...UVA-F-1563 Rev. Jan. 22, 2013 TARGET CORPORATION On November 14, 2006, Doug Scovanner, CFO of Target Corporation, was preparing for the November meeting of the Capital Expenditure Committee (CEC). Scovanner was one of five executive officers who were members of the CEC (Exhibit 1). On tap for the 8:00 a.m. meeting the next morning were 10 projects representing nearly $300 million in capital-expenditure requests. With the fiscal year’s end approaching in January, there was a need to determine which projects best fit Target’s future store growth and capital-expenditure plans, with the knowledge that those plans would be shared early in 2007, with both the board and investment community. In reviewing the 10 projects coming before the committee, it was clear to Scovanner that five of the projects, representing about $200 million in requested capital, would demand the greater part of the committee’s attention and discussion time during the meeting. The CEC was keenly aware that Target had been a strong performing company in part because of its successful investment decisions and continued growth. Moreover, Target management was committed to continuing the company’s growth strategy of opening approximately 100 new stores a year. Each investment decision would have long-term implications for Target: an underperforming store would be a drag on earnings and difficult to turn around without significant investments of time and money, whereas a top-performing store would add value both financially...
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...1. What is Costco’s current business model and why is it appealing? Costco’s business model is predicated on a best-cost theme. They take the low-priced supplier approach and mix that with creating price of the many stakeholders by targeting on wonderful client service, a severe code of beliefs, treating staff like family, concerning suppliers, satisfying shareholders, and a robust intelligence of environmental place. They need to enforce distinctive cost-saving methods in their production, operations, and selling that has allowed them to draw in the foremost affluent customers in discount selling. The central focus of their business model turned around high sales volumes and fast inventory turnover by giving fee-paying members beautifully low costs on a restricted choice merchandise that include a mix of across the country branded and illicit private-label products in an exceedingly wide selection of merchandise classes. This is an awfully appealing business model because it provides the power to control fruitfully at a lot of lower profit margin by securing marketer volume getting agreements, economical distribution, no-frill self-service warehouse facilities and supplemental membership fee revenue. Another magnet is because of the high sales volume and fast inventory turnover style of this business model, the accelerated money conversion cycle permissible Costco to gather the funds for inventory before marketer liabilities changing into due. This provided for marketer finance...
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