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Walmart Inc WMT

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Walmart’s Sales Still Strong Amid Pandemic; Refocused International Portfolio a Long-Term Benefit

Zain Akbari, CFA Equity Analyst

Analyst Note

| Zain Akbari, CFA |

Our $116 fair value estimate for wide-moat Walmart should rise by a low- to mid-single-digit percentage, reflecting the time value of money and solid third-quarter sales that outpaced our targets. While we continue to believe the firm should be able to capitalize on an increasingly omnichannel retail landscape in the near and long term (to the tune of a low- to mid-single-digit sales growth rate and 4% to 5% adjusted operating margins over the next decade), we still suggest investors seek a larger margin of safety as it continues to revamp its business model in a highly competitive environment.

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Company Profile

Business Description

America’s largest retailer by sales, Walmart operates over 11,500 stores under 56 banners, selling a variety of general merchandise and grocery items. Its home market accounted for 77% of sales in fiscal 2020, with Mexico and Central America (6%), the United Kingdom (6%), and Canada (4%) its largest external markets. In the United States, around 56% of sales come from grocery, 34% from general merchandise, and 10% from health and wellness items. The company operates several e-commerce properties apart from its eponymous site, including Flipkart and shoes.com (it also owns a roughly 10% stake in Chinese online retailer JD.com). Combined, e-commerce accounted for about 7% of fiscal 2020 sales.

Contact
702 Southwest 8th Street
Bentonville, AR, 72716
T +1 479 273-4000
Sector Consumer Defensive
Industry Discount Stores
Most Recent Earnings Oct 31, 2020
Fiscal Year End Jan 31, 2020
Stock Type Slow Growth
Employees 2,200,000

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