Running head: FINANCE FOR MANAGERS 1

Finance for Managers

Your Name (First M. Last)

School or Institution Name (University at Place or Town, State)

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Finance for Managers

Introduction

Walmart Stores Inc. is a US-based multinational corporation and operates as

Walmart. It operates a large chain of grocery stores, department stores, and

supermarkets. The head office of the corporation is located in Bentonville, in the U.S.

state of Arkansas. Since listing on the New York Stock Exchange in 1972, it has been

active and it trades on the stock exchange with the ticker symbol of "WMT." It is the

reason that I have chosen this company. It rose from the status of being a regional giant

to a nationwide scale in a few years. It is the largest enterprise in the world and holds

the position of being the largest private organization employing almost 2 million people,

as per the Fortune Global 500.

Status of Walmart

It provides an excellent opportunity for investment in its stocks. The main reason

behind it is the massive amounts of profit that the organization generates every year. In

addition, the profits generated are further invested in the organization for growth and

expansion in the future. All these circumstances mean that the chance of Walmart

turning up no profit is almost impossible. This shows that as a result of aggressive

investment in assets and funds, the company can become a strong dividend payer. Not

only is Wal-Mart's dividend safe, its potential increase is safe according to all

expectations. However, as the world slowly drifts to online shopping, Wal-Mart's growth

can be halted as an in-store experience. This situation is a major threat to Wal-Mart's

equity investment as it is doubtful that future dividends will increase, (Bragues, 2017).

Investment in Walmart's Stocks

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Investment in Walmart's shares is generally at a lower risk as compared to other

shares. It is due to the fact that Walmart is experiencing continuous growth, as evident

from it being the largest income source in the world. In this context, the company

represents a country of a moderate size and if it is indeed considered so, it would be the

26th largest economy in the world. Therefore, its stocks are far superior as compared to

the stocks of any other organization. The risk is further reduced by Walmart entering a

new and more profitable foreign market. Walmart shares show significant dividend

growth due to the potential of international growth.

Competition

Wal-Mart is bigger than competitors. For example, in the discount store, Wal-

Mart dominates the market taking into account its size. The company which can be said

to be the main competitor of Walmart is Target. Target has been increasing its market

share with the extensive advertising and association through contemporary designs.

Besides this main competitor, there are others too, such as Dollar Generation

Corporation and COSCO Wholesale Corporation, but both of them are far behind. In

addition, with more than 4500 stores in the United States, with an additional 6200 stores

across the world, Walmart is the world's largest retail company. Its huge size can be

further elaborated through comparison with its main competitor, Target, which merely

has 1,795 stores in the U.S. its assets were amounted to 203.7 billion in 2015, five

times more than Target.

Growth and Profitability

Wal-Mart has been experiencing rapid growth as it has new stores throughout

the world. This growth is also contributed to its low prices, as it has won over most of
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the costumers as evident from the weekly visits to its stores of almost 100 million

customers. This growth is also a result of Wal-Mart's investing heavily in other formats

and continuously discovering new growth sources. This includes neighboring markets

such as small grocery stores in the suburbs, shops, and supercenters, (McGrath,

Putten, & Pierantozzi, 2018).

Wal-Mart has high profitability. Walmart's net margin in 2016 is 3.07 percent,

demonstrating high profitability. Walmart's earnings improved from 2014 to 2015 but

worsened from 2015 to 2016. In the fiscal year 2017, it made $ 485.14 billion in

revenue. The price/profit margin (P / E) of Walmart in 2016 was 16.05, the index in 2017

was 17.25, it is estimated to be 19.33 in 2018 and it is estimated to be 17.36 in 2019. It

is a good place to do equity investment as dividends will be expected to increase, as the

ratio of 1933 in 2018 suggests that equity investors are willing to pay $ 19.33 per dollar.

It has a dividend and the dividend yield of Walmart is 2.37 percent.

Future

Walmart holds a promising future, specifically in terms of everyday daily growth,

opening up new shops, entering new foreign markets around the world and the

adventure of start-up companies. Walmart has many other ways that it can be

improved. In other words, it means that it has not exhausted all extension methods.

Therefore, the company has a potential for further growth and there is a big room for

more income and greater profits. It will also increase shareholder value. This is actually

the main goal of Walmart Stores in the United States. As the company succeeded in

acquiring and maintaining customers, it has built new stores and accelerated the pace

of renovation, (Qian, 2018).

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Conclusion

In conclusion, it is certainly recommendable to invest in the stocks of Walmart. It

is due to the fact that dividends are likely to increase over time. Walmart has an

excellent financial position and investors have every reason to invest in stocks.

Furthermore, its continuous growth and expansion also play a pivotal role in its

desirability as an investment opportunity.

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References

Bragues, G. (2017). The Stock Market. In Money, Markets, and Democracy (pp. 119-

176). Palgrave Macmillan, New York.

McGrath, R. G., Putten, A. B. van, & Pierantozzi, R. (2018). Does Wall Street buy your

growth story? For how long? Strategy & Leadership, 46(2), 3–10.

https://doi.org/10.1108/SL-01-2018-0005

Qian, J. (2018). Charitable Giving, Corporate Image Building, and Market Expansion:

The Case of Walmart (Doctoral dissertation).