Wal Mart Stock Analysis Essay - 2680 Words

I. Executive Summary The purpose of this report is to evaluate the stock price of Wal-Mart Stores Inc. (which ticker symbol in NYSE is WMT) by fundamental analysis. According to this analysis, I recommend that Wal-Mart is worth to invest in the long term because of the potential growth of market shares and revenue. Besides, based on P/E method and Gordon model, WMT price is undervalued; therefore, if investors buy the stock, they will get benefit not only in capital gain but also in dividend cash inflow. II. Introduction of Wal-Mart Stores Inc. (WMT) Wal-Mart, founded by Sam Walton in 1962, is the world’s largest retailer and public corporation. It operates over 6,500 stores worldwide, employs 1.9 million associates, and serves more†¦show more content†¦Beta is the slope of the characteristic line. As shown in appendix1, we use the monthly historical data from April 2003 to April 2008 to graph SCL. We use SP 500 as the market because it contains the stocks of 500 Large-Cap corporations and can reflect the market change broadly. As shown in exhibit 1, we can get the SCL: Ri-Rf = - 0.001 + 0.1649(Rm - Rf). So the beta is 0.1649 and the alpha (intercept) is -0.001. From the regression line, we find the R square is only 0.103. It reflects the degree that X variable explains Y variable is 10.3%. That is, Ri-Rf has no close relationship with Rm-Rf. In addition, due to the fact that beta is only 0.1649, it also provides the same result which Ri-Rf and Rm-Rf have no strong positive relationship. It is a good issue to cons ider why Wal-Mart stock return does not relate with SP 500 return very well. From exhibit 2, we find the Wal-Mart price did not change very much while SP 500 price went up. The major reasons may be that SP 500 includes many high-tech stocks and those stocks performed very well during the period; therefore the volatility is greater than Wal-Mart. Moreover, maybe Wal-Mart has lower weight in SP 500 so its trend of price change is different from SP 500. From exhibit2, we also find Wal-Mart had good relationship with SP 500 before 2004. To examine the situation, we use the data from 1998 to 2003 and find the SCLShow MoreRelatedStock Analysis : Wal Mart2907 Words   |  12 Pages Stock Analysis - Wal-Mart Wal-Mart Company Background: Name Wal-Mart Stores Inc. Industries served Retail Geographic areas served Worldwide Headquarters Bentonville, US Current CEO Mike Duke Revenue $ 466.950 billion (2012) Profit $ 15.699 billion (2012) Employees 2.2 million (2012) Main Competitors Dollar General Corporation, Costco Wholesale Corporation, Sears Holdings Corporation, Dollar Tree, Inc., Kohl s Corporation, Target Company Profile: Wal-Mart is the biggest AmericanRead MoreStock Analysis of Wal-Mart Inc.767 Words   |  3 PagesThe Wal-Mart company was established on July 2, 1962 in Rogers, Arkansas (History Timeline). 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