reference 1 - Wal-Mart
Student Investment Management
Analyst Report
Initiating Coverage
Wal-Mart Stores Inc.
Wal-Mart operates over 10,000 discount department stores, supermarkets, hypermarkets and wholesale centers under
69 different banners. The company has a presence in 27 countries across the globe.
Overview of Recommendation
Investment Thesis
Opportunities
Track record of excellent management and continued cost cutting to improve margins.
History of returning wealth to investors through aggressive buybacks and dividends.
EDLP strategy and aggressive pricing attracts customers regardless of economic condition.
High growth potential in emerging markets, including significant China presence.
Risks to Recommendation
Continued uncertainty regarding tax policy.
Slowing economic growth in China.
Erosion of market share due to success of certain competitors (Amazon, Target).
Unfavorable exchange rates.
I am initiating coverage with a rating of “BUY” and a 12month price target of $86.00. This target represents potential capital gain of 14.01%, and potential return of
16.51% including dividend income. Wal-Mart is well positioned in its industry, with significant market share among hypermarkets and supercenters. Continued cost cutting efforts have led to increases in margins and improving global economic conditions should lead to international sales growth. Uncertainty over tax policy in the U.S. could lead to cautious consumer spending nearterm, but this should be countered by low priced
“staples” offerings, the company’s EDLP (Every Day Low
Price) marketing strategy, and growth in foreign markets.
April 9, 2013
Student Investment Management: Initiating Coverage
Wal-Mart Stores Inc.
Contents
Company Overview ....................................................................................................................................... 3
Wal-Mart Stores Inc. Analysis
Analyst Report
Initiating Coverage
Wal-Mart Stores Inc.
Wal-Mart operates over 10,000 discount department stores, supermarkets, hypermarkets and wholesale centers under
69 different banners. The company has a presence in 27 countries across the globe.
Overview of Recommendation
Investment Thesis
Opportunities
Track record of excellent management and continued cost cutting to improve margins.
History of returning wealth to investors through aggressive buybacks and dividends.
EDLP strategy and aggressive pricing attracts customers regardless of economic condition.
High growth potential in emerging markets, including significant China presence.
Risks to Recommendation
Continued uncertainty regarding tax policy.
Slowing economic growth in China.
Erosion of market share due to success of certain competitors (Amazon, Target).
Unfavorable exchange rates.
I am initiating coverage with a rating of “BUY” and a 12month price target of $86.00. This target represents potential capital gain of 14.01%, and potential return of
16.51% including dividend income. Wal-Mart is well positioned in its industry, with significant market share among hypermarkets and supercenters. Continued cost cutting efforts have led to increases in margins and improving global economic conditions should lead to international sales growth. Uncertainty over tax policy in the U.S. could lead to cautious consumer spending nearterm, but this should be countered by low priced
“staples” offerings, the company’s EDLP (Every Day Low
Price) marketing strategy, and growth in foreign markets.
April 9, 2013
Student Investment Management: Initiating Coverage
Wal-Mart Stores Inc.
Contents
Company Overview ....................................................................................................................................... 3
Wal-Mart Stores Inc. Analysis
Cited: Wells Fargo Equity Research Report. Nemer, Dill, Wendt, Asif. February 21, 2013. J.P. Morgan Equity Research Report. Horvers, Stubins, Becks, Elder. February 15, 2013.