Walmart Case Study

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Case Study: Valuing Wal-Mart Stock


Group 4 Corporate Finance


Amber Wallace Professor: HieuPhan


Deborah Casey






ThiHa Trang Tran



INTRODUCTIONIn 2006 Wal-Mart was the world’s largest retailer with over 4,000 stores worldwide. Wal-Mart’s strategy was to provide a broad assortment of quality merchandise and services at “everyday low prices” and was a widely recognized brand.Wal-Mart’s growth strategy was to expand through opening 170 new stores annually worldwide.Analysts forecasted Wal-Mart would experience continued increase in profits and earnings growth for the next 5 years at 13.7%. As of late December 2005,Wal-Mart shares were ranked in the next 12 months as follows: (Bloomberg L.P.) * “Buys”: 15 analysts; * “Holds”: 11 analysts; * “Sells”: 1 analyst.Martin’s task is to analyze the Wal-Mart stock and make recommendations to his new and existing clients on whether to buy, sell or hold the stock. To best determine his recommendation he will look at the financials, the competitive environment, strengths and weaknesses, likelihood of external borrowing, DDM and forward-looking P/E.1.)Assess the financial health of Wal-Mart based on the analysis of the company’s financial statements.Upon reviewing the provided financial statements of Wal-Mart for the two years ending January 31, 2004 and 2005, we have determined that the following is a...