WMT: Wal-Mart Stores Inc
Recent Range: $45/share – $60/share (Current Price: 54.53, as of close of 4/23/10)
Price/Sales (P/S) = 0.50 (0.54, Industry)
Price/Book (P/B) = 2.90 (2.85)
Gross Margin = 24.8% (25.3%)
Pre-Tax Margin = 5.4% (5.3%)
Debt/Equity Ratio = 0.58 (0.61)
Current Ratio = 0.9 (1.1)
Return on Equity = 21.2% (19.4%)
Return on Assets = 8.9% (8.1%)
Return on Capital = 13.7% (12.3%)
Analysis: Obviously, Wal-Mart is a very well run company, but...
...as a stock, Wal-Mart is in an ultra-competitive big box retail industry, which does not have a lot of upside for its stock holders. Its profits margins are barely above their competitors.
Notice that the Price/Sales is an awesome 0.50, but the industry average is just barely more than that at 0.54. This is a prototypical example of why you check your company’s figures against its competition. Everyone in this industry makes a ton a sales, but many of its sales do not generate a lot of profit.
The two (2) biggest positives about this company is that it gets more from its capital (1.5% over the industry average, which in this industry is HUGE.), and that it pays a consistent dividend (over 2% annually).
This is a stock for someone who wants something safe over a long period.
It is not a stock for someone who is trying to build his or her asset base. The stock is too expensive in a too competitive industry for what you get.
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