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Walmart, Valuation Case Study

In: Business and Management

Submitted By bollo007
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VALUING WAL-MART STOCK1

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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, Wal-Mart was the world’s largest retailer and had over 4,000 stores worldwide, including stores in all 50 states as well as international stores in Argentina, Brazil, Canada, Germany, Mexico, Puerto Rico, South Korea, the United Kingdom, joint venture agreements in China, and a stake in a leading Japanese retail chain. Wal-Mart had 1.3 million employees (known as “associates”) in the

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