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Actionable news in WMT: WAL-MART STORES Inc,

Wal-Mart: A Thorn For Traders And A Gem For Futurists

Slowed retail sales growth in America presents a threat to Wal-Mart's future growth.

The growth of Wal-Mart's operations in international markets will be the main catalyst for future growth, as growth has been higher abroad.

Wal-Mart is investing heavily in its ecommerce business, which has achieved disappointing growth in the short term.

Despite disappointing performance this year, Wal-Mart's (NYSE:WMT) stock price has been recovering recently due to the company's earnings beating analysts' estimates this quarter. The challenges of declining retail sales growth in America is an extremely relevant threat for the company, yet the growth of its international operations and ecommerce business can both serve as substantial catalysts for the company's future growth. Wal-Mart's international growth will be spearheaded by growth in China, while it faces issues with growth in Japan and Brazil. Given the company's extremely low valuation, high dividend yield, and extreme potential to achieve growth in international markets, Wal-Mart is an excellent buy for those willing to ignore the present struggles, and take a futuristic view of the company's upside potential.

Wal-Mart's stock price has been ascending gradually, after the announcement of its Q3 earnings.

Key Statistics

P/E

12.72

Forward P/E

14.78

P/B

2.44

P/S

0.4

Profit Margin

3.19%

Operating Margin

5.39%

ROA

8.06%

ROE

19.32%

Debt/Equity

60.51

Current Ratio

0.89

Dividend Yield

3.39%

Beta

0.36

Valuation: Valuation has become extremely lower, compared to the beginning of 2015, when the company's P/E was approximately 18. While its earnings growth this year has been disappointing, the sell-off has been too strong, resulting in Wal-Mart currently being an excellent value based investment. The company's P/S is also incredibly low, further edifying it as a solid value pick. High expenditure to develop its ecommerce business during the next two years may deter earnings growth in the future, which is a factor to consider when assessing valuation in the future.

WMT PE Ratio (TTM) data by YCharts

Profitability: The company's profit margin and operating margin were both disappointingly low, and were significantly lower than the industry and sector averages. Slowed retail sales growth in the United States will continue to pose a threat to its profitability, while its global operations and ecommerce business provide the opportunity for an increase in profitability in the future. Wal-Mart has strategically responded to decreased profitability and high cost of revenue by reducing its workforce to cut costs.

Management Effectiveness: ROE and ROA were both impressive, and significantly higher than the industry and sector averages.

Debt: Wal-Mart's Debt/Equity is extremely high, yet the collective industry and sector average is 79.6.

Volatility: Wal-Mart's beta of 0.36 indicates its extreme...


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