Walmart is a global leader in retail and wholesale operations throughout the world. The company's operations are in three segments; Walmart U.S., Walmart International, and Sam's Club. It operates supercenters, hypermarkets, supermarkets, warehouse clubs cash and carry stores convenience store, drug store, cash and carry store, membership-only warehouse clubs, and mobile commerce. The product range from the company includes grocery products like meat, natural and organic, deli and bakery, alcoholic and non-alcoholic drinks dairy products frozen foods, dry grocery, floral, and consumables. The company also provides electronics, cameras, photo processing service movies, wireless, music, video games, books and stationery, automotive, hardware and paints, sporting goods and the list is endless. The company offers branded merchandise in addition to fuel and financial service (Lichtenstein, 2013; Walmart, 2016).
Walmart believes in everyday low-cost price strategy to help improve the well-being of its customers by helping them save money. The company competes on price leadership where its products are priced lower than the competitors. The ability to [price products at lower prices emerge from its purchase on bulk from supplies thus benefiting from low prices. Its ability to sell at low prices has made it the largest retail outlet in the world controlling sizeable volume f sales (Walmart, 2016).
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The American segment provides the largest revenues for the company followed by the international segment and lastly by the Sam's Club. Despite record high revenues from its sales, the profit margins are slightly lower than its close competitors like Target which sells premium products. The company, however, has managed to capture a sizeable market share and throughout the world (Walmart, 2016).
The fiscal year for the company ends on January 31 and reports its financials every year. Walmart has a market capitalization of 258.431B and a price-earnings ratio of 26.69. The earnings per share for the company are 3.28 and its Beta is 0.46. The profit margin for the company from the latest quarterly report was 1.97% and the operating margin was 4.45%. Return on assets was 6.89% and return on equity was 13.04%. The total revenues recorded by the company were 500.34 billion and the revenues per share were 167.06. Quarterly revenue growth year on year is 4.10% and the gross profit was 126.95 billion. Earnings before interest and tax were 32.78 billion and the net income available to the common shareholder was 9.86 billion. The diluted earnings per share are 3.28 and quarterly earnings growth year on year is -42.10% (Yahoo finance, 2018).
The total cash held by the company is 6.76 billion and the total cash per share is 2.29. The total debt is 46.67 billion and the total debt to equity is 57 .75. The current ratio is 0.76and the book value per share 26.38. The operating cash flow is 28.34 billion and the levered free cash flow is 17.32 billion (Yahoo finance, 2018).
Walmart global ethics is responsible for its culture of integrity. The company develops and upholds its policies for ethical behavior for its stakeholders. The company also raises awareness of the policies while offering channels to its stakeholders so that they can bring out their concerns to the attention of the company. The company's global ethics performs as a guide and resource for making ethical decisions. It also offers confidential reporting system and leads to the enhancement of ethics (Walmart, 2016).
Target Corporation operates as a general merchandiser in the USA. The company’s products include beauty and houses essentials. The list of the company’s product offering is endless. The company also offers in-store amenities including Target cafe target optical, Starbucks among another food service. The products are sold through the company's stores and the digital channel including target.com (Target, 2018).
The company's market capitalization stood at 38.38 billion and it's enterprise value if 47.74 billion. The trailing P/E is 13.33. The price to sales was 0.53 and price book is 3.29. The profit margin is 4.08% and its operating margin is 6.13%. Return on Assets is 7.20% and return on equity is 25.85%. Revenues for the company were 71.88 billion and the revenue per share as 131.45Quartely revenue growth was 10% and the gross profits were 20.75 billion. Earnings before interest and tax were 6.85 and the net income available to shareholders was 2.93 billion. Dilute earnings per share was 5.33 and the quarterly earnings growth was 34.8%. The total cash per share recorded on the balance sheet was 4.91 and total debt was 11.59 billion. Total debt to equity is 98.96 and the current ratio is 0.95. The book value per share is 21.62. Operating cash flow from Target is 6.92 billion and levered free cash flow is 3,94 (Yahoo finance, 2018).
Target is a highly ethical company in the world. The company has led severally on this pointer as demonstrated by Ethisphere Institute. The company recognizes that ethical practices are the building blocks of a successful and solid business. The company for long has established an unwavering drive to ethical practices including generous community support. The company continues to be committed to its corporate responsibility. The company expects that its employees would also demonstrate sound ethical businesses that lead to appropriate business practices and sound judgment and integrity (Target, 2018).
The company is determined to maintain legal compliance and operating its business in an ethical way and with integrity. Such commitment forms the foundation of the company’s unique culture. Such initiatives strengthen its competitive advantage supporting the experiences expected by the clients (Target, 2018).
Comparison
Source: Yahoo finance
The above image shows the share prices for the two companies from 2015. The blue line indicates the shares for Walmart and the purple line shows Target’s share price,
Financial Statement
|
Income Statement |
|||
| All numbers in thousands | |||
| Revenue |
2/3/2018 |
1/28/2017 |
1/30/2016 |
| Total Revenue |
71,879,000 |
69,495,000 |
73,785,000 |
| Cost of Revenue |
51,125,000 |
49,145,000 |
52,241,000 |
| Gross Profit |
20,754,000 |
20,350,000 |
21,544,000 |
| Operating Expenses | |||
| Research Development |
- |
- |
- |
| Selling General and Administrative |
14,248,000 |
13,356,000 |
14,665,000 |
| Non-Recurring |
- |
- |
- |
| Others |
2,194,000 |
2,025,000 |
1,969,000 |
| Total Operating Expenses |
- |
- |
- |
| Operating Income or Loss |
4,312,000 |
4,969,000 |
4,910,000 |
| Income from Continuing Operations | |||
| Total Other Income/Expenses Net |
- |
- |
620,000 |
| Earnings Before Interest and Taxes |
4,312,000 |
4,969,000 |
5,530,000 |
| Interest Expense |
666,000 |
1,004,000 |
607,000 |
| Income Before Tax |
3,646,000 |
3,965,000 |
4,923,000 |
| Income Tax Expense |
718,000 |
1,296,000 |
1,602,000 |
| Minority Interest |
- |
- |
- |
| Net Income From Continuing Ops |
2,928,000 |
2,669,000 |
3,321,000 |
| Non-recurring Events | |||
| Discontinued Operations |
6,000 |
68,000 |
42,000 |
| Extraordinary Items |
- |
- |
- |
| Effect Of Accounting Changes |
- |
- |
- |
| Other Items | - | - | - |
| Net Income | |||
| Net Income |
2,934,000 |
2,737,000 |
3,363,000 |
| Preferred Stock And Other Adjustments |
- |
- |
- |
| Net Income Applicable To Common Shares |
2,934,000 |
2,737,000 |
3,363,000 |
|
Walmart |
|||
|
Income Statement |
|||
| Revenue | 1/31/2018 | 1/31/2017 | 1/31/2016 |
| Total Revenue |
$500,343,000 |
$485,873,000 |
$482,130,000 |
| Cost of Revenue |
$373,396,000 |
$361,256,000 |
$360,984,000 |
| Gross Profit |
$126,947,000 |
$124,617,000 |
$121,146,000 |
| Operating Expenses | |||
| Research Development |
0 |
0 |
0 |
| Selling General and Administrative |
$106,510,000 |
$101,853,000 |
$97,041,000 |
| Non Recurring |
0 |
0 |
0 |
| Others |
0 |
0 |
0 |
| Total Operating Expenses |
106510000 |
101853000 |
97041000 |
| Operating Income or Loss |
$20,437,000 |
$22,764,000 |
$24,105,000 |
| Income from Continuing Operations | |||
| Total Other Income/Expenses Net |
($2,984,000) |
$100,000 |
$81,000 |
| Earnings Before Interest and Taxes |
$17,453,000 |
$22,864,000 |
$24,186,000 |
| Interest Expense |
$2,330,000 |
$2,367,000 |
$2,548,000 |
| Income Before Tax |
$15,123,000 |
$20,497,000 |
$21,638,000 |
| Income Tax Expense |
$4,600,000 |
$6,204,000 |
$6,558,000 |
| Minority Interest |
($661,000) |
($650,000) |
($386,000) |
| Net Income From Continuing Ops |
$9,862,000 |
$13,643,000 |
$14,694,000 |
| Non-recurring Events | |||
| Discontinued Operations |
$0 |
$0 |
$0 |
| Extraordinary Items |
0 |
0 |
0 |
| Effect Of Accounting Changes |
0 |
0 |
0 |
| Other Items |
0 |
0 |
|
| Net Income |
$9,862,000 |
$13,643,000 |
$14,694,000 |
| Net Income |
$9,862,000 |
$13,643,000 |
$14,694,000 |
| Preferred Stock And Other Adjustments |
0 |
0 |
0 |
| Net Income Applicable To Common Shares |
$9,862,000 |
$13,643,000 |
$14,694,000 |
|
Target Inc Balance Sheet |
|||
| All numbers in thousands | |||
| Period Ending |
2/3/2018 |
1/28/2017 |
1/30/2016 |
| Current Assets | |||
| Cash And Cash Equivalents |
2,643,000 |
2,512,000 |
4,046,000 |
| Short-Term Investments |
- |
- |
- |
| Net Receivables |
- |
- |
- |
| Inventory |
8,657,000 |
8,309,000 |
8,601,000 |
| Other Current Assets |
1,264,000 |
1,169,000 |
1,483,000 |
| Total Current Assets |
12,564,000 |
11,990,000 |
14,130,000 |
| Long-Term Investments |
- |
- |
- |
| Property Plant and Equipment |
25,018,000 |
24,658,000 |
25,217,000 |
| Goodwill |
- |
- |
- |
| Intangible Assets |
- |
- |
- |
| Accumulated Amortization |
- |
- |
- |
| Other Assets |
1,417,000 |
783,000 |
915,000 |
| Deferred Long Term Asset Charges |
- |
- |
- |
| Total Assets |
38,999,000 |
37,431,000 |
40,262,000 |
| Current Liabilities | |||
| Accounts Payable |
12,931,000 |
10,989,000 |
11,654,000 |
| Short/Current Long Term Debt |
270,000 |
1,718,000 |
815,000 |
| Other Current Liabilities |
- |
- |
153,000 |
| Total Current Liabilities |
13,201,000 |
12,707,000 |
12,622,000 |
| Long-Term Debt |
11,317,000 |
11,031,000 |
11,945,000 |
| Other Liabilities |
2,059,000 |
1,879,000 |
1,915,000 |
| Deferred Long Term Liability Charges |
713,000 |
861,000 |
823,000 |
| Minority Interest |
- |
- |
- |
| Negative Goodwill |
- |
- |
- |
| Total Liabilities |
27,290,000 |
26,478,000 |
27,305,000 |
| Stockholders' Equity | |||
| Misc. Stocks Options Warrants |
- |
- |
- |
| Redeemable Preferred Stock |
- |
- |
- |
| Preferred Stock |
- |
- |
- |
| Common Stock |
45,000 |
46,000 |
50,000 |
| Retained Earnings |
6,553,000 |
5,884,000 |
8,188,000 |
| Treasury Stock |
- |
- |
- |
| Capital Surplus |
5,858,000 |
5,661,000 |
5,348,000 |
| Other Stockholder Equity |
-747,000 |
-638,000 |
-629,000 |
| Total Stockholder Equity |
11,709,000 |
10,953,000 |
12,957,000 |
| Net Tangible Assets |
11,709,000 |
10,953,000 |
12,957,000 |
Walmart
Balance Sheet
| Period Ending | 1/31/2018 | 1/31/2017 | 1/31/2016 |
| Current Assets | |||
| Cash And Cash Equivalents | $6,756,000 | $6,867,000 | $8,705,000 |
| Short Term Investments | 0 | 0 | 0 |
| Net Receivables | $5,614,000 | $5,835,000 | $5,624,000 |
| Inventory | $43,783,000 | $43,046,000 | $44,469,000 |
| Other Current Assets | $3,511,000 | $1,941,000 | $1,441,000 |
| Total Current Assets | $59,664,000 | $57,689,000 | $60,239,000 |
| Long Term Investments | $0 | $0 | $0 |
| Property Plant and Equipment | $114,818,000 | $114,178,000 | $116,516,000 |
| Goodwill | $18,242,000 | $17,037,000 | $16,695,000 |
| Intangible Assets | $0 | $0 | $0 |
| Accumulated Amortization | $0 | $0 | $0 |
| Other Assets | $11,798,000 | $9,921,000 | $6,131,000 |
| Deferred Long Term Asset Charges | $0 | $0 | $0 |
| Total Assets | $204,522,000 | $198,825,000 | $199,581,000 |
| Current Liabilities | |||
| Accounts Payable | $68,859,000 | $63,008,000 | $58,615,000 |
| Short/Current Long Term Debt | $9,662,000 | $3,920,000 | $6,004,000 |
| Other Current Liabilities | $0 | $0 | $0 |
| Total Current Liabilities | $78,521,000 | $66,928,000 | $64,619,000 |
| Long Term Debt | $36,825,000 | $42,018,000 | $44,030,000 |
| Other Liabilities | $0 | $0 | $0 |
| Deferred Long Term Liability Charges | $8,354,000 | $9,344,000 | $7,321,000 |
| Minority Interest | $2,953,000 | $2,737,000 | $3,065,000 |
| Negative Goodwill | |||
| Total Liabilities | $126,653,000 | $121,027,000 | $119,035,000 |
| Stockholders' Equity | |||
| Misc. Stocks Options Warrants | |||
| Redeemable Preferred Stock | |||
| Preferred Stock | |||
| Common Stock | $295,000 | $305,000 | $317,000 |
| Retained Earnings | $85,107,000 | $89,354,000 | $90,021,000 |
| Treasury Stock | |||
| Capital Surplus | $2,648,000 | $2,371,000 | $1,805,000 |
| Other Stockholder Equity | ($10,181,000) | ($14,232,000) | ($11,597,000) |
| Total Stockholder Equity | $77,869,000 | $77,798,000 | $80,546,000 |
| Net Tangible Assets | $204,522,000 | $198,825,000 | $199,581,000 |
| Cash Flow | |||
| All numbers in thousands | |||
| Period Ending |
2/3/2018 |
1/28/2017 |
1/30/2016 |
| Net Income |
2,934,000 |
2,737,000 |
3,363,000 |
| Operating Activities, Cash Flows Provided By or Used In | |||
| Depreciation |
2,445,000 |
2,298,000 |
2,213,000 |
| Adjustments To Net Income |
229,000 |
487,000 |
-812,000 |
| Changes In Accounts Receivables |
- |
- |
- |
| Changes In Liabilities |
1,757,000 |
-516,000 |
585,000 |
| Changes In Inventories |
-348,000 |
293,000 |
-316,000 |
| Changes In Other Operating Activities |
-168,000 |
30,000 |
221,000 |
| Total Cash Flow From Operating Activities |
6,923,000 |
5,436,000 |
5,958,000 |
| Investing Activities, Cash Flows Provided By or Used In | |||
| Capital Expenditures |
-2,533,000 |
-1,547,000 |
-1,438,000 |
| Investments |
-55,000 |
28,000 |
24,000 |
| Other Cash flows from Investing Activities |
-487,000 |
46,000 |
1,922,000 |
| Total Cash Flows From Investing Activities |
-3,075,000 |
-1,473,000 |
508,000 |
| Financing Activities, Cash Flows Provided By or Used In | |||
| Dividends Paid |
-1,338,000 |
-1,348,000 |
-1,362,000 |
| Sale Purchase of Stock |
-938,000 |
-3,485,000 |
-3,183,000 |
| Net Borrowings |
-1,441,000 |
-664,000 |
-85,000 |
| Other Cash Flows from Financing Activities |
- |
- |
- |
| Total Cash Flows From Financing Activities |
-3,717,000 |
-5,497,000 |
-4,630,000 |
| Effect Of Exchange Rate Changes |
- |
- |
- |
| Change In Cash and Cash Equivalents |
131,000 |
-1,534,000 |
1,836,000 |
| Cash Flow | |||
| All numbers in thousands | |||
| Period Ending | |||
| Net Income |
$9,862,000 |
$13,643,000 |
$14,694,000 |
| Operating Activities, Cash Flows Provided By or Used In | |||
| Depreciation |
$10,529,000 |
$10,080,000 |
$9,454,000 |
| Adjustments To Net Income |
$4,042,000 |
$967,000 |
$738,000 |
| Changes In Accounts Receivables |
($1,074,000) |
($402,000) |
($19,000) |
| Changes In Liabilities |
$4,457,000 |
$5,714,000 |
$3,002,000 |
| Changes In Inventories |
($140,000) |
$1,021,000 |
($703,000) |
| Changes In Other Operating Activities |
$0 |
$0 |
$0 |
| Total Cash Flow From Operating Activities |
$28,337,000 |
$31,673,000 |
$27,552,000 |
| Investing Activities, Cash Flows Provided By or Used In | |||
| Capital Expenditures |
($10,051,000) |
($10,619,000) |
($11,477,000) |
| Investments |
$0 |
($1,901,000) |
$0 |
| Other Cash flows from Investing Activities |
$991,000 |
($1,467,000) |
$802,000 |
| Total Cash Flows From Investing Activities |
($9,060,000) |
($13,987,000) |
($10,675,000) |
| Financing Activities, Cash Flows Provided By or Used In | |||
| Dividends Paid | |||
| Sale Purchase of Stock |
($8,304,000) |
($8,388,000) |
($5,438,000) |
| Net Borrowings |
($1,437,000) |
($3,591,000) |
($3,158,000) |
| Other Cash Flows from Financing Activities |
($3,320,000) |
($398,000) |
($676,000) |
| Total Cash Flows From Financing Activities |
($19,875,000) |
($19,072,000) |
($16,285,000) |
| Effect Of Exchange Rate Changes |
$487,000 |
($452,000) |
($1,022,000) |
| Change In Cash and Cash Equivalents |
($111,000) |
($1,838,000) |
($430,000) |
From the analysis of the two companies, it is evident from the ratio analysis that Target Company has a stronger position to meet its working capital requirement. The two companies have continued to report growing revenues and asset base as shown in the financial statements. However, Target stock prices have continued to decline while Walmart has reported continuous growth over the years. The two companies also have maintained their risks at a low level by maintaining low debts to equity ratios. However, Target is more aggressive than Walmart in the use of external debt. Target finances most of its operations from debt compared to Walmart. Target has lower sales than Walmart which is shown by its lower asset management ratios. Target has a higher profitability ratio than Wallmart indicating that target translates more revenues to gross profits than Walmart. The return on equity for Target is also higher than Walmart indicating that investors earn more from holding shares in the company. Target has an advantage in its use of debt and higher profit margins which have resulted in an increased return on equity. Target finances most of its operations from investors while Walmart benefits from cash flows from operations. Walmart also uses most of its cash to pay dividends, repurchase stock and to borrow. Considering the profit margins, ROA, ROE and operating profit margins Target is more profitable than Walmart however, it does not apply its assets appropriately.
References
Lichtenstein, N. (2013). The retail revolution . New York: Henry Holt and Company.
Lichtenstein, N. (2011). Wal-Mart . New York: New Press.
Meeks, M., & Chen, R. (2011). Can Walmart Integrate Values with Value?: From Sustainability to Sustainable Business. Journal Of Sustainable Development , 4 (5). http://dx.doi.org/10.5539/jsd.v4n5p62
Nasdaq (2018). WMT Balance Sheet. (n.d.). Retrieved from https://www.nasdaq.com/symbol/wmt/financials?query=balance-sheet
2016 Annual Report | Target Corporate. (2018). Retrieved from https://corporate.target.com/annual-reports/2016
Walmart, (2016). Promoting good governance . Corporate.walmart.com . Retrieved 5 th May 2018, from https://corporate.walmart.com/2016grr/promoting-good-governance
Walmart. (2018). Walmart Stores Inc Annual report 10-K . Sec.gov . Retrieved 28 April 2018, from https://www.sec.gov/Archives/edgar/data/104169/000010416916000079/wmtform10-kx1312016.htm
