Ratio

Debt/Capital Ratio:
Return on Equity
Net Margin
Payout Ratio
Current Ratio

Formula
Debt/(Debt +Shareholder's equity)
Net income / shareholder's equity
Net income / revenue
Dividend per share / Earning per share
current liability / current assets

Current FY P/E (2010)

Prior FY P/E (2009)
Price / Sales
Price/Book
Book Value / Share
Market Capitalization

Market price / earning per share

Market Price / Earning per share
Price / Revenue per share
Price / Book Value per share
Book value per share
Outstanding shares * market share price

Results

Comment
55.77%
19.66%
3.51%
29.38%
0.87 times
14.38
14.4 Exhibit 6
0.51
2.83
18.86
206,754 millions

WMT: Valuation

1 Dividend Discount Method

P
Ke

= D/(Ke g)
= Rf + *(Rm-Rf )

P (payout rate) = Dividend payment / recent earning per share

Payout ratio

29%

Ke

6.99%

g = (1-p)*Ke

0.04941

WMT share price

$ 59.08

Assumptions:
1. Risk free rate (Government Bond yield)
2. Adjusted Beta of Wal-Mart
3. Historical US Market risk premium
4.Dividend Y1=$ 1.21

Data
1
2
3

Data
Rf
Adj Beta
Market premium

3.68%
0.6553
5.05%

WMT: Valuation

Intrinsic value (Price) = the project (upcoming year) earning/share * forward-looking P/E multiple (as projected by a
Projected P/E ratio
Intrinsic Value

=
=

Assumptions:
1. The project (upcoming year)
earning/ share:
Current earning per share
Estimated current earnings growth

13.40 (Exhibit 7)
$ 55.03

4.11

3.72

10.40%

forward-looking P/E multiple (as projected by analyst)

WMT: Valuation
Discount rate

6.99%

Growth Period
Growth years
Initial growth rate of EPS

Growth years payout = curren

40%
60%
3%

Transition period
Transition years
Transition years payout

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18

Assumption
Growth year EPS
Growth year EPS
Growth year EPS
Growth year EPS
Growth year EPS
Transition Year EPS
Transition Year EPS
Transition Year EPS
Transition Year EPS
Transition Year EPS
Transition Year EPS
Transition Year EPS
Transition Year EPS
Transition Year EPS
Transition Year EPS
Transition Year EPS
Transition Year EPS
Maturity
Estimated WMT share price

Current Fiscal year EPS

Current calender year dividend
Current payout

5
10.40%

Maturity period
Payout at maturity
Retention rate at maturity
Growth rate at Maturity

Year

Other information

Growth + transition years

Terminal Value = DIV1/(r-g)

12
32

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

EPS
4.11
4.53
5.01
5.53
6.10
6.74
7.40
8.10
8.82
9.56
10.33
11.12
11.93
12.75
13.59
14.44
15.29
16.15

Growth
10.40%
10.40%
10.40%
10.40%
10.40%
9.88%
9.39%
8.92%
8.47%
8.05%
7.64%
7.26%
6.90%
6.55%
6.23%
5.92%
5.62%
3.00%

Dividend
$
1.20
$
1.33
$
1.47
$
1.62
$
1.79
$
2.16
$
2.37
$
2.59
$
2.82
$
3.06
$
3.31
$
3.56
$
3.82
$
4.08
$
4.35
$
4.62
$
4.89
$
6.46

Assumptions:
1 Assuming the company will experience significant growth at the rate of 10.4 % during it's growth years (5 years).
2 During the transition year (yr 6-17) we believe the profitability of Walmart will gradually decline towards the industry
3 During the maturity year (yr 18) we believe the profitability of Walmart is at the industry average (3%)

Other information

Current Fiscal year EPS

Current calender year dividend
Current payout

3.72
1.09
29.30%

Growth years payout = current

29.30%

Growth + transition years

17

erminal Value = DIV1/(r-g)

Payout*
29.30%
29.30%
29.30%
29.30%
29.30%
32.00%
32.00%
32.00%
32.00%
32.00%
32.00%
32.00%
32.00%
32.00%
32.00%
32.00%
32.00% $
40.00%

TV

161.93

s growth years (5 years).

decline towards the industry average.
average (3%)

PV
(Div+TV)
$
1.12
$
1.16
$
1.20
$
1.24
$
1.28
$
1.44
$
1.48
$
1.51
$
1.54
$
1.56
$
1.57
$
1.58
$
1.59
$
1.59
$
1.58
$
1.57
$ 52.90
$

75.88