One year ago I wrote an article on Walmart Stores Inc. identifying a few of the company's fundamentals. I thought it would be interesting to look at those same fundamentals one year later to see just how the company compares today with then. As you can see below, the information is rather revealing. It's an important lesson to do these comparisons every so often so that investors will have perspective on their investments.
| 28 May 2014 Price $75.53 1yr Target $81.00 Analysts 20 1yr Cap Gain 7.24% Dividend $1.92 Yield 2.54% 1yr Tot Return 9.78% 3y EarnGR 2.93% 5yr EarnGR 7.55% 3yr DivGR 16.45% 5yr DivGR 15.11% Payout Ratio 39.34% Beta .47 EPS (ttm) $4.82 EPS next yr $5.63 P/E 15.67 PEG 1.98 ROA 9.60% ROE 26.70% | 27 May 2015 Price $75.19 1yr Target $80.57 Analysts 23 1yr Cap Gain 7.15% Dividend $1.96 Yield 2.60% 1yr Tot Return 9.75% 3y EarnGR 3.72% 5yr EarnGR 6.36% 3yr DivGR 9.45% 5yr DivGR 11.98% Payout Ratio 55.70% Beta 0.44 EPS (ttm) $4.89 EPS next yr $5.01 P/E 15.38 PEG 3.54 ROA 9.70% ROE 25.00% |
Walmart Stores, Inc. operates retail stores in various formats worldwide. The company operates through three segments: Walmart U.S., Walmart International, and Sam’s Club. It operates discount stores, supermarkets, supercenters, hypermarkets, warehouse clubs, cash and carry stores, home improvement stores, specialty electronics stores, restaurants, apparel stores, drug stores, and convenience stores, as well as retail Websites, such as walmart.com and samsclub.com. The company’s stores offer meat, produce, deli, bakery, dairy, frozen foods, alcoholic and nonalcoholic beverages, and floral and dry grocery; health and beauty aids, baby products, household chemicals, paper goods, and pet supplies; electronics, toys, cameras and supplies, photo processing services, cellular phones, cellular service plan contracts and prepaid services, movies, music, video games, and books; and pharmacy, optical, over-the-counter drugs, and clinical services. Its merchandise also include stationery, automotive accessories, hardware and paint, sporting goods, fabrics and crafts, and seasonal merchandise; apparel for women, girls, men, boys, and infants, as well as shoes, jewelry, and accessories; and home furnishings, housewares and small appliances, bedding, home décor, outdoor living, and horticulture products. The company also provides financial services and related products, including money orders, prepaid cards, wire transfers, money transfers, check cashing, and bill payment. In addition, it offers brand name merchandise, including hardgoods, softgoods, and selected private-label items, such as Member’s Mark and its own proprietary brands, such as Daily Chef and Simply Right. Further, the company operates banks that provide consumer financing programs. It operates approximately 11,000 stores under 72 banners in 27 countries; and e-commerce websites in 11 countries. The company was founded in 1945 and is headquartered in Bentonville, Arkansas. (Summary) (Company) (Daily Chart)
The most disturbing thing about the information above is the similarity of the numbers even though an entire year has passed. The prices, targets, and dividends are just pennies apart while the cap gain, yield, and total return are just a few basis points apart. Comparing the two it's hard to believe that a year has passed between them. In addition the growth rates, the EPSs, the estimated EPSs, the P/E ratios, the ROAs and the ROEs are also oddly similar.
What's different are the payout ratios and the PEGs. That discovery leads me to the conclusion that growth has been slowing for Walmart this past year. With the P/Es similar, the rising PEG is a result of slowing growth. And with the dividend growing by only 2% year over year while the payout ratio has gone from 39% to 55%, profits are also falling in conjunction with sales.
None of this can be good for investors. Before I invest any additional funds in this company I need to understand how Walmart will improve revenues and earnings going forward. Without understanding that, the fundamentals can only be expected to get worse.
What's different are the payout ratios and the PEGs. That discovery leads me to the conclusion that growth has been slowing for Walmart this past year. With the P/Es similar, the rising PEG is a result of slowing growth. And with the dividend growing by only 2% year over year while the payout ratio has gone from 39% to 55%, profits are also falling in conjunction with sales.
None of this can be good for investors. Before I invest any additional funds in this company I need to understand how Walmart will improve revenues and earnings going forward. Without understanding that, the fundamentals can only be expected to get worse.
 28 May 2014 |  27 May 2015 |
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