Wal-Mart Inc. Operates retail stores worldwide through three main segments, Walmart US, Walmart International and Sams Club. The stores include supermarkets, drug stores, cash and carry stores, electronics stores etc. All major product categories are offered at the Walmart stores. The company is headquartered at Arkansas, US and was founded in 1945. It operates more than 11,000 stores worldwide in 28 countries.
The company has grown at a consistent rate of around 2% over the last two years. The total revenue for year ended January 2015 stood at $485.651 billion. The net income of the company grew by 2% in 2015 over 2014, after declining by more than 5% in the previous year. The net income margin stood at 3.4% in 2015, declining slightly over the last two years from 3.6% in 2013 (Yahoo Finance).
The stockholder’s equity increased significantly in 2015 by almost $5 billion due to large increase in retained earnings. The position of equity is not worrisome as the equity has been increasing consistently over recent period and is much higher than long term debt, keeping the leverage on a lower side (Yahoo Finance).
The analyst’s estimates show that the projected revenue, profit and earnings per share are likely to be on a downward trend over the next two years. The revenue is expected to be down by 0.1% and 2.8% for the next two years respectively. EPS too is likely to come down this year but may increase the next year. Overall, the projections look bleak for the company (Yahoo Finance).
In comparison with two competitors, Target Corp. and Costco Wholesale, Wal-Mart is in between the two in terms of margins. It has higher gross and operating margin than Costco but lower margins than Target. In comparison with overall industry, it has slightly lower margins (Yahoo Finance).
I agree with the statement that most failures of small companies happen due to growth issues. Once they are able to establish early revenues, they are not able to scale up their performance and then fail due to declining margins.
References
Yahoo Finance. Company Information. Yahoo Finance. Retrieved from http://finance.yahoo.com/q?s=WMT.
