Dividend Stock Wednesday: Wal-Mart (WMT)
- 6 Comment
 |
This is an analysis completed by The Dividend Guy. It is not to be used as investment advice or a recommendation to buy, hold, or sell any stocks discussed. Please ensure you complete your own analysis.
The Wal-Mart stock has finally shown some signs of life in the past few weeks. I have been an owner of Wal-Mart for some time now, and the last few years has not been the best for the stock. Concerns over the ability to grow given its already mammoth size and the backlash on labor practices and the perception that once a company comes into a community all other stores around it suffer. These are real issues that an investor must understand before making a decision to buy the stock. I decided to take a more in depth look at Wal-Mart as part of my overall portfolio review. Here is that review for you to see.
The Company: Wal-Mart Stores Inc. (WMT-NYSE)
The Company operates retail stores in various formats around the world. Wal-Mart Stores retail formats include: Discount Stores, Supercenters, and Neighborhood Markets.
| Yes | |
| Yes |
THE FUNDAMENTALS
Revenue
Click to EnlargeRevenue Scoring
| Criteria | Scoring |
| Consistenly Up with No Down Years | 1.0 |
| Up Trend with < 2 Down Years | 0.5 |
| Choppy with > 2 Down Years | 0.0 |
| My Revenue Score | 1.0 |
Earnings Per Share
Click to EnlargeEarnings Per Share Scoring
| Criteria | Scoring |
| Consistenly Up with No Down Years | 1.0 |
| Up Trend with < 2 Down Years | 0.5 |
| Choppy with > 2 Down Years | 0.0 |
| My EPS Score | 1.0 |
TOTAL FUNDAMENTALS SCORE: 2.0
THE RATIOS
Return on Equity
Click to EnlargeReturn on Equity Scoring
| Criteria | Scoring |
| Above 15% for Last 5 Years | 1.0 |
| At Least One Year Below 15% in Last 5 Years | 0.0 |
| My ROE Score | 1.0 |
Other Ratios
| Ratio | Criteria | Value | Score (Pass=1 / Fail = 0) |
| Debt to Equity | < 0.50 | 0.75 | 0.0 |
| Payout Ratio | < 60% | 27% | 1.0 |
| Credit Rating | > BBB+ | 0.52 | 1.0 |
| Total Ratio Score | 2.0 |
TOTAL RATIOS SCORE: 3.0
DIVIDEND DATA
Annual Dividends
Click to EnlargeDividend Scoring
| Criteria | Scoring |
| 25+ Years of Dividend Growth | 1.0 |
| 10+ Years of Dividend Growth | 1.0 |
| < 10 Years of Dividend Growth | 0.0 |
| My Dividend Growth Score | 2.0 |
TOTAL DIVIDEND GROWTH SCORE: 2.0
STOCK VALUATION
| Valuation Metric | Criteria | Value | Score (Pass=1 / Fail = 0) |
| Dividend Yield | Cur Yld > 10 Yr Avg Yld | 0.8% | 1.0 |
| Div Yld Compared to SPY Div Yld | Cur Yld > SPY Yld | 2.3% | 0.0 |
| P/E Ratio | Cur P/E < 10 Yr Avg P/E | 28.1 | 1.0 |
| Relative P/E | Relative P/E < 1.0 | 0.55 | 1.0 |
| Price to Sales | < 1.5 | 0.52 | 1.0 |
| Total Ratio Score | 4.0 |
Canadian Shareowner’s Association Stock Selection Guide Software Buy Price
| Buy Zone |
Maybe Zone |
Sell Zone |
Current Price | Rating | Scoring (Buy=1.0, Other=0.0) |
| 1.0 |
TOTAL STOCK VALUATION SCORE: 5.0
SUMMARY
Points Earned:
12 out of 14
The stock is rated HIGH with 11 points earned through my analysis of the stock. As I currently own WMT and am not looking to add to my portfolio at this time, I am goind to do nothing. However, I would be open to adding to my portfolio if my asset allocation called for more U.S. equity.
| Rating | Points Required |
| High | 11+ points |
| Medium | 8-10 points |
| Low | < 8 points |
Reminder: This is an analysis completed by The Dividend Guy. It is not to be used as investment advice or a recommendation to buy, hold, or sell any stocks discussed. Please ensure you complete your own analysis.
The Dividend Guy owns shares in Wal-Mart (WMT)
6 Comments on this post
Trackbacks
-
Tyler said:
Hello,
This is an excellent method for evaluating stocks. Do you have a spreadsheet that is available for download?January 30th, 2008 at 9:12 am -
Dividendgrowth said:
Interesting analysis on WMT. The company has been trading sideways for 8 years now, while its annual dividends have increased from 24 cents in 2000 to 88 cents in 2007. The payout ratio does look promising , and the valuation looks pretty decent at current levels. My only issue is that its yield is less than 2%. At $50 per share that means that the dividend would have to be raised to $0.25 per quarter OR the stock price would have to be at or below $44,00.
Good luck with your investment!February 1st, 2008 at 10:07 am -
Lee said:
Wal-Mart stock has years of history of being an opportunity for stock investment during times when the economy is down trending. Consumers downsize their retail buying while becoming more price conscious; this is an advantage for discount retailers while upscale retailers tend to struggle.
I don’t see Wal-Mart stock being “boring” for the next few years.February 16th, 2008 at 4:03 pm
[...] unknown wrote an interesting post today onHere’s a quick excerptThis is an analysis completed by The Dividend Guy. It is not to be used as investment advice or a recommendation to buy, hold, or sell any stocks discussed. Please ensure you complete your own analysis. … [...]
[...] Dividend Guy analyzes one of the most boring stocks in existence (WMT) American Consumer News has some retirement advice for [...]
[...] Sykes hosted this week’s festival of stocks, which included my analysis of Wal-Mart. According to him it is the most boring stock in the world. That is something that I am very ok [...]