Many companies are concerned with battling the leader in the industry. Small businesses have to come up with creative ways to make sure they offer a different product or service from the market leader. What if instead of being the small company fighting the big company, you are that 800lb gorilla in your marketplace? This is the situation Wal-Mart Stores, Inc. (NYSE:WMT) faces today. It is the market leader when it comes to retail sales, but what can the company do to continue growing and competing?
Wal-Mart Has Its Competition Beat By These 2 Measures
If you ask the average person for the names of Wal-Mart Stores, Inc. (NYSE:WMT)’s major competitors, you’ll likely hear companies like, Target Corporation (NYSE:TGT), Costco Wholesale Corporation (NASDAQ:COST), and Amazon.com, Inc. (NASDAQ:AMZN). Target Corporation (NYSE:TGT) and Wal-Mart Stores, Inc. (NYSE:WMT) go head-to-head in many towns in the U.S. and now that Target Corporation (NYSE:TGT) is taking its show to Canada, this battle may become global.
Costco Wholesale Corporation (NASDAQ:COST) offers groceries and other items at cheap prices but charges a membership fee like Wal-Mart Stores, Inc. (NYSE:WMT)’s Sam’s Club. Everyone knows that Amazon.com, Inc. (NASDAQ:AMZN) is a threat to any industry they enter. With general merchandise sales making up 64% of Amazon’s total revenue, the company has set its eyes on Wal-Mart Stores, Inc. (NYSE:WMT)’s throne.
All this being said, one thing Wal-Mart Stores, Inc. (NYSE:WMT) offers that beats their peers is a class-leading yield. The company’s dividend of 2.4% trumps Target Corporation (NYSE:TGT) at about 2% and Costco at 1.1%, and of course Amazon pays no dividend at all.
Another positive is the value of the stock relative to what investors can expect in total returns. We already know Wal-Mart’s yield of 2.4% leads their peers, and though their expected growth rate of 9.29% is lower than their peers, their P/E ratio of about 14.5 is lower as well. In fact, if we use a PEG+Y calculation to compare these companies, Wal-Mart looks like the second best value of the bunch.