Walmart
The business field is a vast domain nowadays, and there are many companies using their resources to sell various products and services to consumers and make money. The website “Fortune” even has a special ranking list called “Fortune 500,” which indicates the largest and most successful companies worldwide, such as Apple, Microsoft, and Amazon. However, the first position of this ranking list is taken by Walmart, a large retail corporation that operates on the multinational level and involves selling products In 24 countries through more than 10,000 various facilities, such as hypermarkets, department stores, grocery stores, and more. Walmart was founded more than 60 years ago by American entrepreneur Samuel Walton, who was, at some point, the most successful businessman in the United States. Thus, this paper aims to analyze the current financial state of Walmart and its key performance indicators to assess the company’s financial growth and sustainability.
Walmart: Key Performance Indicators and other significant elements
Here are several of the main key performance indicators of Walmart. The total revenues of the company are more than 559 billion dollars, making it the first company in the Fortune 500 ranking since there is no other company with such high total revenues. For example, the next company on the list, Amazon, has almost 175 billion dollars less in terms of total revenues, meaning that Walmart is not only the leading business company in the contemporary market but also has a significant breakaway compared to other firms and organizations. Furthermore, other key performance indicators presented on the slide demonstrate that Walmart is currently experiencing a positive financial state with high stock opportunities.
Walmart’s Revenue from the previous three years
The following is detailed information on Walmart’s total revenues from the previous three years. It can be traced that the company’s revenues are getting significantly higher from year to year, increasing for the amount of 14 billion dollars in 2019 and another 9,5 billion dollars in 2020. The calculations of Walmart’s total revenues in 2021 illustrate that they have increased by another 36 billion dollars, which is an exceptionally high indicator compared to previous rises. The reason for such an increase is most likely the coronavirus pandemic, which is to be discussed later in this presentation. Furthermore, analysts estimate that the company’s revenues will increase further in the near future, which is also a positive element.
Cash Flow and Net Cash over the past three years
Next, come details on Walmart’s cash flow and net cash in terms of the end cash position over the past three years provided by Yahoo Finance. The numbers on the slide represent the sum of three main components of the company’s net cash: operating cash flow, investing cash flow, and financing cash flow. First, the operating cash flow was 27,753 million dollars in 2019, 25,255 million dollars in 2020, and 36,074 million dollars in 2021. Then, the investing cash flow was –24,036 million dollars in 2019, -9,128 million dollars in 2020, and –10,071 million dollars in 2021. Finally, the financing cash flow was –2,537 million dollars in 2019, -14,299 million dollars in 2020, and –16,117 million dollars in 2021. It is clear that the company’s overall cash flow has been growing significantly over the past three years. Moreover, the net cash of Walmart has been even higher in the trailing twelve months, namely 22,598 million dollars in terms of the end cash position.
Other Key Performance Indicators
Other key performance indicators of Walmart include the company’s stock price, market capitalization, and analysts’ recommendations regarding the stock. Although the price has been higher in the 52-week range, it has been estimated to increase further during the following year. Based on this estimate, most analysts – 21 out of 35 – recommend buying Walmart’s stock now, meaning that more than half of them suggest that the stock price will genuinely increase and be more profitable for selling further. The company’s broad scope of activity and the market capitalization indicator further prove the profit of buying Walmart’s stock.
Relation of the stock price to the price-to-earnings ratio
Next, we’ll demonstrate how the current stock price of Walmart and its price-to-earnings ratio are related. As it is known, the price-to-earnings ratio illustrates the amount of money that the current market is ready to pay for the company’s actions. As can be seen on the slide, the corresponding relation shows that the current stock price of Walmart is 3,5 times higher than its price-to-earnings ratio.
Market capitalization and its meaning to the investor
The total market capitalization of Walmart is currently more than 388 billion dollars. Market capitalization shows the total value of the company’s outstanding stocks, calculated by multiplying the overall number of the shares by the current stock market price. This metric can be applied to calculate the company’s relative size, which is highly significant for investors. The process of investment is always associated with exploring the market, analyzing key performance indicators of the particular company, and making a decision regarding buying, selling, or holding the company’s stock. Thus, since the market capitalization indicator represents the company’s overall value, it is imperative to create various plans of investments and conduct marketing strategies.
Evaluating the trends in stock price, dividend payout, and total stockholders’ equity
Here are the current trends related to stock price and dividends that are inherent to Walmart. As can be seen, the stock market price is growing, while dividend payout and total stockholders’ equity remain stable. Dividend payout indicates the part of net income that Walmart pays to its stockholders in the form of dividends, while total stockholders’ equity is the overall amount of assets that shareholders can access after all the company’s liabilities have been entirely covered.
Relating the evaluated trends to recent events and market conditions: The coronavirus pandemic
There are many external and internal factors that can impact the stock trends described in the previous slide. However, the most influential of them is the coronavirus since many companies, including Walmart, have experienced significant changes during the pandemic and have had to reconstruct their marketing strategies to adjust to the circumstances established by the virus. Although Walmart experienced specific difficulties when the pandemic started, it has further used the situation to its advantage as people now tend to address large retail corporations when buying products to reduce the necessity to go shopping and stay home most of the time. That state of affairs represents the so-called “Walmart Effect”: local businesses usually suffer when such a large firm as Walmart appears in the area since those companies start to lose their customers. Moreover, Walmart is currently working towards protecting its market share gains, implementing various expensive programs, such as the capital expenditure program that costs 14 billion dollars.
Results of the analysis
Based on the overall results of the analysis of the current market state of Walmart, it can be claimed that the company’s financial goals are entirely justifiable, and the firm appears to be efficient in terms of financial growth and sustainability. First, its stock price increases while its dividend payout and total stockholders’ equity remain stable. Second, the average estimate of the company’s future shows positive results, meaning that Walmart is likely to further develop and expand as a business undertaking, which also involves its financial stability. Finally, more than half of analysts recommend buying the company’s stock, which demonstrates that the results of professional business analytics are optimistic regarding the company’s stock price and the corresponding potential profit.
Reference
Yahoo Finance (2021). Walmart Inc.