WAL-MART - University of Virginia “Listen to everyone in your company, exceed your customers' expectations, but most importantly, control your expenses better than your competition

WAL-MART

� “Listen to everyone in

your company, exceed

your customers'

expectations, but most

importantly, control your importantly, control your

expenses better than

your competition, this is

where you can always

find the competitive

advantage.” Sam

Walton

WALMART IS A BUY!

� Growth

� Leader in its industry

� Strong Financials

� No real threats

� Good Management

� Successful in their business model

� Future Growth

Wal-Mart

Ticker Symbol: WMT

Exchange Traded on: NYSE

Current Market Price: 60.25

Wal-Mart’s History

� 1960s

� Foundation and incorporation

� 1970s

� Wal-Mart goes public� Wal-Mart goes public

� 1980s:

� Sam’s Club and Superstores open

� 1990s:

� Expansion everywhere

How Does The Business Work?

SUPPLIER 1

Warehouse

SUPPLIER 2

FOOD

How Does the Business Work?

Median to Low

Household

IncomeGrocery

Stores

Gas

Stations

Sales

100,000

120,000

140,000

160,000

180,000

0

20,000

40,000

60,000

80,000

100,000

1996 1997 1998 1999 2000

Wal-Mart

K-Mart

Target

Earnings Per Share

0.8

1

1.2

1.4

0

0.2

0.4

0.6

0.8

1998 1999 2000

Wal-Mart

Target

Future EPS

Number of stores

2,500

3,000

3,500

4,000

0

500

1,000

1,500

2,000

2,500

1998 1999 2000

Wal-Mart

K-Mart

Target

Industry Leader

Revenues (millions)

16%

Net Income3%

18%

13%

71%

79%

Number of Stores

29%

15%

56%

Porter’s Five Forces

� Bargaining Power of Suppliers

� Threat of New entrants

� Bargaining power of Buyers

� Threats of substitute products or services

� Rivalry among existing competitors

Strong Financials

� EPS� 1.25

� PE Ratio� 41.61

� Current Ratio� 0.99� 0.99

� Debt/Equity� 0.67

� Return on Assets� 8.18%

� Return on Equity� 20.29%

Stock Chart

No real threats

� Margins are decreasing

� Still have best margins in the industry

� K-Mart coming back and beating Wal-Mart:

� Yeah, like that’s going to happen

Successful in their business model

� What is their business model?

Basket of Goods Analysis

� Looked for .. Items and recorded their price

� Electronics

� Clothes

� Pharmacy

Sports� Sports

� Cleaning Supplies

� Food

� School Supplies

� Hardware

� Calculated total savings

Good Management

� President & CEO

� H. Lee Scott

� Executive Vice President

� Thomas D. Hyde� Thomas D. Hyde

� Chairman of the Board

� S. Robson Walton

� CIO

� Thomas M. Schoewe

Questions?