We've been asking ourselves recently if the market has placed a fair valuation on Walmart. Let's dive into some of the fundamental values of this Large-Cap Consumer Discretionary company to determine if there might be an opportunity here for value-minded investors.
Walmart's P/B and P/E Ratios Are Higher Than Average:
Walmart Inc. engages in the operation of retail and wholesale stores and clubs, eCommerce websites, and mobile applications worldwide. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 20.93 and an average price to book (P/B) ratio of 2.93. In contrast, Walmart has a trailing 12 month P/E ratio of 43.2 and a P/B ratio of 9.63.
Walmart has moved 38.0% over the last year compared to 16.7% for the S&P 500 — a difference of 21.3%. Walmart has a 52 week high of $105.3 and a 52 week low of $72.52.
Positive Cash Flows:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $523,964 | $559,151 | $572,754 | $611,289 | $648,125 | $680,985 |
| Operating Margins | 4% | 4% | 5% | 3% | 4% | 4% |
| Net Margins | 3% | 2% | 2% | 2% | 2% | 3% |
| Net Income (M) | $14,881 | $13,510 | $13,673 | $11,680 | $15,511 | $19,436 |
| Net Interest Expense (M) | -$2,410 | -$2,194 | -$1,836 | -$1,874 | -$2,137 | -$2,245 |
| Depreciation & Amort. (M) | $10,987 | $11,152 | $10,658 | $10,945 | $11,853 | $12,973 |
| Diluted Shares (M) | 8,547 | 8,391 | 8,133 | 8,110 | 8,082 | 8,051 |
| Earnings Per Share | $1.74 | $1.61 | $1.68 | $1.44 | $1.92 | $2.41 |
| EPS Growth | n/a | -7.47% | 4.35% | -14.29% | 33.33% | 25.52% |
| Avg. Price | $101.55 | $123.62 | $137.26 | $136.26 | $157.65 | $100.99 |
| P/E Ratio | 58.03 | 77.26 | 82.69 | 94.62 | 82.11 | 41.73 |
| Free Cash Flow (M) | $14,550 | $25,810 | $11,075 | $11,984 | $15,120 | $12,660 |
| CAPEX (M) | $10,705 | $10,264 | $13,106 | $16,857 | $20,606 | $23,783 |
| EV / EBITDA | 28.32 | 31.84 | 31.67 | 35.97 | 33.45 | 19.76 |
| Total Debt (M) | $45,207 | $44,309 | $37,667 | $38,840 | $39,579 | $35,999 |
| Net Debt / EBITDA | 0.98 | 0.84 | 0.71 | 0.85 | 0.76 | 0.63 |
| Current Ratio | 0.84 | 0.95 | 0.86 | 0.85 | 0.85 | 0.78 |
Walmart has growing revenues and increasing reinvestment in the business, positive EPS growth, and healthy leverage levels. However, Walmart has weak operating margins with a stable trend, positive cash flows, and not enough current assets to cover current liabilities because its current ratio is 0.78.
