Wal Mart Stock Analysis

2700 words 11 pages
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
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Hence, we can recognize that beta will be different when comparing with different market or period. It also reflects the market is difficult to predict. In order to make analysis, I will use the beta = 0.1694 for Wal-Mart because the number is based on current situation.

Exhibit1 Wal-Mart stock characteristic line (data from 2003 to 2008)

Exhibit 2 The movement of price for WMT and S&P 500 from 2004 to 2008.

Exhibit3 Wal-Mart stock characteristic line (data from 1998 to 2003)

IV. Fundamental Analysis of Wal-Mart Stock Valuation
Fundamental analysis relies on fundamental financial characteristics (such as revenue) about the firm and its corresponding industry that are expected to influence stock value. This analysis is proper to evaluate the stock in long term performance because it considers the economy, industry, and the future cash flow for the company. They will be discussed as follows.
A. Economy and Industry analysis. America has the largest national GDP in the world and is the largest importer of goods and second largest exporter. The lower limitations in financial market and foreign capital such as interest rate regulations and foreign exchange rate regulations make the economy prosperity. Besides, the favorable environment such as large population and high disposal income lead retail industry boom. Retail industry is the second-largest


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