3). Increasing Revenue per Square Foot: Utilizing every square foot of every location the company possesses more efficiently is a very real opportunity for the company to streamline their business and improve margins
4). Market Share: Wal-Mart operates in an extremely competitive industry, and any gain in market share the company is able to obtain could fuel sales growth
1). Rising Input Prices: Wal-Mart prides itself on offering products for the lowest price, however when input prices rise, the company must choose to sacrifice margins or potentially lose customers
Major publicly traded competitors of Wal-Mart include Target Corporation (NYSE:TGT), Costco Wholesale Corporation (NASDAQ:COST), Dollar General Corp. (NYSE:DG), and Dollar Tree, Inc. (NASDAQ:DLTR). All of these companies operate in the discount retail industry and compete directly with Wal-Mart. Target is valued at $40.16 billion, pays out a dividend yielding 2.33%, and carries a price to earnings ratio of 13.67. Costco is valued at $44.51 billion, pays out a dividend yielding 1.08%, and carries a price to earnings ratio of 25.36. Dollar General is valued at $14.58 billion, does not pay out a dividend, and carries a price earnings ratio of 16.20. Dollar Tree is valued at $9.34 billion, does not pay out a dividend, and carries a price to earnings ratio of 16.54.
The Foolish Bottom Line:
Financially, Wal-Mart is an incredible company. The company possesses solid and steady revenue growth in all economic cycles, a rapidly expanding dividend, and a basement valuation. The only true weakness of the business is its debt load. Looking forward, Wal-Mart’s future is filled with fast-paced international expansion, and steady growth in the United States. All in all, Wal-Mart shares currently trade at a rock-bottom valuation, the company is of the finest caliber in terms of reliable revenue and dividend growth, and in the end is a tremendous investment for any long-term investor that will trounce the overall market for decades to come.
The article 50 Years of Stability, Dividends, and Growth originally appeared on Fool.com and is written by Ryan Guenette.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.