To The Moon

I would look at $Wal-Mart(WMT)$ like a grocery supermarket cum retailer who is much larger in size than our local largest supermarket chains. I have visited a few of Wal-Mart stores when I went to US for work and holidays. They have many supercenters.

The impression that it gave me is their stores are very strategic located and hence would generate foot traffic pretty well. I would not say I have been to many cities in US, but those cities I visited are quite common one.

They will be reporting their earnings today (21 Feb) pre-market.

Here are advantage and disadvantage data which might affect how their financial result might turn out.

Advantage

1.       Earnings are forecast to grow 15.72% per year.

2.       Earnings have grown 7.5% every year over the past 5 years (does not seem to be affected by the pandemic)

3.       Their dividends payout is reliable at 1.53%

Disadvantage

1.       Do note that they have quite a high amount of debt

2.       They have a large one-off loss of $9.5B which impact their Oct 31 22 financial results.

3.       There have been quite a significant amount of insider selling over the last 3 months.

Financial Position Analysis

Wal-Mart (WMT) short-term assets cannot cover its short-term liabilities, but it does exceed its long-term liabilities. For the short-term, we would need to see the plan on how they are going to grow more assets in order to cover their short term liabilities as well.

This might be since they have quite a high amount of debt.

Debt to Equity History and Analysis

Wal-Mart net debt to equity ratio (46.3%) is considered high. Their debt-to-equity ratio has increased to 60.8% over the last 5 years. It would be something that I will be looking out on their report pre-market today (21 Feb) how they planned to reduce their debt.

Their debt is well covered by their strong operating cash flow (48.3%). And they can pay interest on the debt as it is well covered by the EBIT (15.5x coverage).

Balance Sheet

Their balance is healthy for most of the items, except for Debt which is a $48.8b. No doubt they can covered their debt, but moving on, the cost of servicing debt might increase, this might lower down their operating cash flow.

Summary

I would see how Wal-Mart (WMT) trade today (21 Feb) after their earnings. The ability to overcome the debt would be important to me. No doubt it is covered by their operating cash flow. If economy condition were to worsen, their servicing cost might be high.

I am evaluating Wal-Mart because as of my trading portfolio which I have shared. It would be under Retail Stock if I were to invest in it.

@TigerStars appreciate your support, thanks in advance for your support!

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Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Technical Analysis, and there are many other indicators that need to be look at together. (e.g., Price Action, Volume, etc.).