Life

Case 3: Wal*Mart

Capital Markets and Investment FHW

Wal*Mart Valuation Case

This report discusses the valuation procedure of Wal*Mart stock from the perspective of an analyst. Accordingly, the discussion will start by presenting the role and function of an analyst in making investment recommendations, followed by an analysis of the company under discussion, Wal*Mart. When exploring this investment opportunity, we will talk about the nature of the company and of the industry it operates in, an analysis of the financial information and a discussion of the different valuation approaches available for estimating the company’s intrinsic value. Finally, we will make a recommendation on the Wal*Mart stock and conclude by looking at the status of the company’s stock at present.

The Analyst

An analyst’s role in the field of financial services is twofold: the first part involves research into the economic conditions as well as company fundamentals to assess trends (which may consist of any number of variables) and probable potential that a particular company or economic sector has. The second part is to analyze this information and make recommendations to decision makers in a company or investors so they can make the best of these trends. The motivation of an analyst is to try and stay ahead of the investment curve. The major capabilities an investment analyst should possess is the ability to predict future trends in stocks from reading current market activities. The analyst should be able to advice when it is a good time to buy a particular company’s stock, when an investor should hold the stock and when the perfect time to sell is.

In the Wal-Mart case Rachel was an investment analyst working with a brokerage firm, therefore her opinions especially towards an investment in Wal-Mart were completely neutral and solely for the purpose of advising her clients and the brokerage firms management on potential investment possibilities with Wal-Mart -...