I'm Buying Wal-Mart Stock, Are You?
Since the beginning of 2015 I have been slowly acquiring stock in Wal-Mart Stores Inc. (WMT). Up until recently I have been using my Loyal3 account to pickup $100 a month in shares. Wal-Mart stock price has been falling the past 60 days, so I decided to increase my stake. I have made two recent purchases of $1,000 each. Purchase one was on May 23rd, 13.3121 shares at $1000. Purchase two was on June 8th, 13.7874 shares at $1,000. I now own 33.1434 shares. This share total will add $65 dollars to my annual dividend income. Wal-Mart is latest addition to my Dividend Dreams Fund.
An Overview of Wal-Mart
Wal-Mart Stores, Inc. is engaged in the operation of retail, wholesale and other units in various formats around the world. The Company offers an assortment of merchandise and services at everyday low prices (EDLP). The Company's operations are conducted in three segments: Walmart U.S., Walmart International and Sam's Club. The Walmart U.S. segment operates retail stores in all 50 states in the United States, Washington D.C. and Puerto Rico, with three primary store formats, as well as digital retail. The Walmart International segment consists of operations in 26 countries outside of the United States and includes numerous formats divided into three main categories: retail, wholesale and other. The Sam's Club consists of membership-only warehouse clubs and operates in 48 states in the United States and in Puerto Rico, as well as digital retail. Learn more about the Wal-Mart business and strategy at the company investor relations pages.
Wal-Mart Dividends And Annual Growth Rate
- 3-Year Compound Annual Growth Rate of 9.6%
- 5-Year Compound Annual Growth Rate of 12%
- 10-Year Compound Annual Growth Rate of 14%
- Annual Dividend Yield of 2.70%
- 5-Year Dividend Per Share Average of $1.61
- 5-Year Dividend Yield Average of 2.27%
- Payout Ratio of 39.87%
The chart below shows the past seven years of annual dividends for the Wal-Mart. The chart illustrates a commitment to creating shareholder value.
Is Wal-Mart Stock Fairly Priced
F.A.S.T Graphs shows that Wal-Mart has danced the valuation line the past 5-years. From mid 2014 until recently the stock was overvalued, however, today the stock is trading at the blue line. This means Wal-Mart is fairly valued.
S&P Capital IQ ranks Wal-Mart as 4-stars with a target price of $86. Morningstar ranks Wal-Mart as 4 stars with a fair price of $81.
Wal-Mart Earnings Per Share and Sales Growth
- 1-year EPS Growth of 1.72%
- 5-years EPS Growth of 5.87%
- 1-year EPS Growth Forecast of 5.61%
- 5-year EPS Growth Forecast of 10.00%
- 1-year Sales Growth of -5.64%
Profitability
- Gross Profit Margin, 24.85%
- Operating Profit Margin, 5.49%
- Net Profit Margin, 3.37%
- Cash Flow Per Share (TTM), $7.91
- Book Value/Share (MRQ), $23.73
- Enterprise Value, $280.76B
Financial Strength
- Current Ratio, 0.89
- Quick Ratio, 0.23
- Long-Term Debt, $42.96B
- Long-Term Debt to Capital, 32.99
- Total Debt to Capital, 38.57
Management Effectiveness
- Return on Assets, 8.13%
- Return on Equity, 21.16%
- Return on Investment, 12.74%
Wal-Mart Risks
All investing comes with risk. I believe opportunity outweighs risk in the case of Wal-Mart. Risk 1 - Online commerce could cannibalize Wal-Mart's in-store sales. This could leave WalMart at a cost disadvantage relative to online competitors because of physical store operating costs. Risk 2 - Internationalization is a segment Wal-Mart needs to grow in yet many international locations have shown poor return on assets. The company needs to focus on improvement internationally. Risk 3 - Capturing the younger crowd. Wal-Mart is perceived to be a boring and somewhat of a bully. Can Wal-Mart capture future customers?
Conclusion
Wal-Mart is a fantastic stock to hold in a DGI portfolio. The company has a proven rack record of generating returns for investors. Wal-Mart stock has taken a beating lately which has created in my opinion a buying opportunity. I am happy to add more shares of Wal-Mart to my portfolio.
What is your opinion of Wal-Mart? Which stocks are you buying these days?
Full Disclosure: Long WMT
I am not a certified financial planner. I am a personal investor and blogger who writes about my personal ...
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why would anyone with any ethics invest in this corporate criminal?
Great article, I did in fact buy WMT. What other stocks would you recommend?
I bought @73 maybe gone @72.
Why? There are two near me - one never has enough staff, and the staff always seems unhelpful and/or incompetent. Doing in store pick took so long, I would pay more elsewhere just to avoid the hassle. But recently they opened a much nicer, large store also near by (opposite direction). It is bright, clean, plenty of staff and all are helpful and friendly. It's become a pleasure to shop there!
The some situation and they change the places of the goods all time and despite that there is not a shortage of products in Brazil, sometimes we cannot find the stuffs, even basic like Nestlé products.