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Walmart Inc WMT

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Strong U.S. Marks Propel Walmart’s Second Quarter as Pandemic Continues to Lift Sales; Shares Rich

Zain Akbari, CFA Equity Analyst

Analyst Note

| Zain Akbari, CFA |

We expect to raise our $111 per share valuation for wide-moat Walmart by a mid-single-digit percentage after it posted strong second-quarter top-line growth in its U.S. businesses, reflecting continued heightened shopper activity in response to the pandemic and economic stimulus programs. Despite the uptick, our long-term forecast still calls for low-single-digit annual percentage sales growth and 4% adjusted operating margins, on average. We suggest investors await a more attractive entry point.

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Company Profile

Business Description

America’s largest retailer by sales, Walmart operates over 11,500 stores under 56 banners, selling a variety of general merchandise and grocery items. Its home market accounted for 77% of sales in fiscal 2020, with Mexico and Central America (6%), the United Kingdom (6%), and Canada (4%) its largest external markets. In the United States, around 56% of sales come from grocery, 34% from general merchandise, and 10% from health and wellness items. The company operates several e-commerce properties apart from its eponymous site, including Flipkart and shoes.com (it also owns a roughly 10% stake in Chinese online retailer JD.com). Combined, e-commerce accounted for about 7% of fiscal 2020 sales.

Contact
702 Southwest 8th Street
Bentonville, AR, 72716
T +1 479 273-4000
Sector Consumer Defensive
Industry Discount Stores
Most Recent Earnings Jul 31, 2020
Fiscal Year End Jan 31, 2020
Stock Type Slow Growth
Employees 2,200,000

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