Valuing Wal-Mart - 2069 Words

Assessment of Wal-Mart valuation using different methods To test the assumption of a discount rate of 7% as given in the outline of the case, we calculated the required rate of return for the Wal-Mart stock using CAPM . Using rWalMart = Rf + ÃŽ ²WalMart [E(RM) – RF], we find the required rate of return to be 7.01% and in line with the information given in the case outline. Perpetual dividend growth model: The standard method of calculating a stock price using the perpetual dividend growth model is done by assessing a company’s dividend one year into the future adding the future expected growth rate. The formula is written as: P0 = D1/(Ke − g), where Ke is the investor required return, D1 is next year’s dividend and g is the†¦show more content†¦By calculating the dividend per share until D=3 and employing: P0 = D1/(1+Ke)^1 + D2/(1+Ke)^2 + D3/(1+Ke)^3+TV/(1+Ke)^3, where TV is the terminal value we calculate the present day intrinsic value of the Wal-Mart stock to be $62.15 hence the market value is consider low compared to our forecasted value. This method replicates the basic foundation of the Discount Cash flow Model (DCF), which in our opinion is the preferred method in valuation studies. Three-Stage Approach: There are no questions about this approach in the outline of the assignment, so the following comments should be considered â€Å"back of an envelope† considerations. In general the three-stage approach allows us to add complexity to the standard dividend discount models by enabling changing growth scenarios throughout the forecasting period: an initial period of higher than normal growth, a transition/consolidation period of declining growth and final a period of stable growth. The main assumptions are that the company on which we conduct the calculation study currently is in extraordinary strong growth phase. The time period with the extraordinary strong growth must be strictly defined and eventually be replaced with the declining growth assumption. Lastly, Capital Expenditures and Depreciation are expected to grow at the same rate as revenues. . Analyzing exhibit 4 we see aShow MoreRelatedValuing Wal-Mart2083 Words   |  9 PagesAssessment of Wal-Mart valuation using different methods To test the assumption of a discount rate of 7% as given in the outline of the case, we calculated the required rate of return for the Wal-Mart stock using CAPM . Using rWalMart = Rf + ÃŽ ²WalMart [E(RM) – RF], we find the required rate of return to be 7.01% and in line with the information given in the case outline. Perpetual dividend growth model: The standard method of calculating a stock price using the perpetual dividend growth modelRead MorePrinciples And Practices Of Leadership Project1385 Words   |  6 Pages Principles and Practices of Leadership Project Institution: Patten University I. Leadership Context Wal-Mart Incorporation is a giant discounting retail store that was founded by Sam Walton in Rodgers Bentonville, Arkansas in the year 1962. Sam Walton headed the company as its Chief Executive Officer until 1988 when he retired and his position was assumed by David Glass then followed by Lee Scott, Mike Duke and the current CEO who is Doug McMillon. McMillon has been among one ofRead MoreWal Mart s Corporate Administration1709 Words   |  7 PagesIntroduction:- Wal-Mart is one of the biggest retail location in the United States, and it is bigger than some other retail network on the planet. At present Wal-Mart works in excess of 4,150 retail offices all inclusive. Likewise, the organization is the prevailing retail location in Canada, Mexico, and the United Kingdom . As indicated by the Fortune 500 record of the wealthiest and most capable organizations on the planet, Wal-Mart holds the most obvious spot, positioned by its aggregate dealsRead MoreWal Mart : An American Multinatio nal Retail Corporation1738 Words   |  7 PagesCompany Overview Wal-Mart Stores, Inc., popularly known as Wal-Mart, is an American multinational retail corporation that runs chains of large discount department stores and warehouse stores. Wal-Mart has been ranked as number 1 in the list of Fortune 500 companies for 2013. (CNN money, 2013) The company was founded by Sam Walton in 1962, incorporated on October 31, 1969 and is listed on the New York Stock Exchange. It is headquartered in Bentonville, Arkansas, United States. It is also the largestRead MoreWalmart Part Three: Planning1227 Words   |  5 PagesMission Statement: Level 1 Founded in 1962, Wal-Mart has continued to uphold its mission statement of â€Å"Save Money. Live Better.† Wal-Mart shows commitment and appreciation to its customers by valuing them through everyday low prices. Customers can trust Wal-Mart because of their low price guarantee. Building a relationship with customers is an essential part of Wal-Mart’s mission because it allows them to meet their customers’ expectations and provide superior customer service. In return of theRead MoreWal-Mart Is Rated As Largest Of The United States Retail1977 Words   |  8 PagesWal-Mart is rated as largest of the United States retail stores and as the world’s biggest retail chain. Sam Walton started this company in 1962 with the three policy goals as service to the customers, personal respect and to strive for excellence. Wal-Mart is globally operating over 4,150 retail facilities currently. Wal-Mart store is the leading retail store (www.walmart.compar. 1) in Canada an d Mexico as well as in the United Kingdom. Wal-Mart is number one regarding total sales in the list ofRead MoreWalmart Swot Analysis857 Words   |  4 Pageshas progressed toward becoming today. Strengths: In 1962, Wal-Mart was one of the principal organizations to apply the self-benefit market plan of action created by basic supply chains to offer general stock. Wal-Mart focused on little, southern towns that were disregarded by its adversaries and which had enough request to help one expansive markdown store, while others centered urban and rural areas. Wal-Mart developed rapidly by valuing its items lower than those of nearby retailers, over and overRead MoreEmployee Engagement Is The Active Pursuit Of These Objectives Essay1160 Words   |  5 Pagesownership of himself and actively participate in driving change.‘Involvement’ is the active pursuit of these objectives. An involved employee will help drive the organization forward and add value to your business. Businesses like Google, Ford, and Wal-Mart and tackling slackers with new and creative ways to get more involved employees. Ford Motor Company is an American multinational automaker headquartered in Michigan. Ford’s mission is to go further to make their cars better, their employees happierRead MoreWal Mart Stock Analysis Essay2680 Words   |  11 Pagesprice of Wal-Mart Stores Inc. (which ticker symbol in NYSE is WMT) by fundamental analysis. According to this analysis, I recommend that Wal-Mart is worth to invest in the long term because of the potential growth of market shares and revenue. Besides, based on P/E method and Gordon model, WMT price is undervalued; therefore, if investors buy the stock, they will get benefit not only in capital gain but also in dividend cash inflow. II. Introduction of Wal-Mart Stores Inc. (WMT) Wal-Mart, foundedRead MoreEssay on Wal-Mart2713 Words   |  11 Pagessuccess lies in one man: Sam Walton, creator of Wal-Mart. At the heart of Wal-Marts growth is the unique culture that quot;Mr. Samquot; built. His business philosophy was based on the simple idea of making the customer No. 1. He believed that by serving the customers needs first, his business would also serve its associates, shareholders, communities and other stakeholders. The goal at Walmart.com is to bring Mr. Sams culture and philosophy from Wal-Mart stores to the Internet. Sam Walton had three