The client (Sheila) is a thirty-year-old lady seeking to diversify their investment pool as an employee for one of the country's top sales companies. As a young marketing manager, she is a risk seeker, which she attributes to a young age where she can learn from investment decisions. The client has invested in other successful small businesses and maintains a positive attitude towards entrepreneurship. With job security at Whirlpool, she is guaranteed a pension pay at the end of her retirement. Nevertheless, Sheila's goal is to invest in stocks in the long term to reinvest the initial capital and enjoy the profits in the long run.
Considering earnings per share, price-earnings ratio, business model, and future economic projections, Walmart is the ideal company to invest in for the client. Since 2006, earnings per share for the multinational corporation has increased progressively from $2.68- $5.19 (McMillon, 2019). Their stock price will likely increase and currently stand at $131.63, boosting the price-earnings ratio to 31.92% from 32.35 % in the first quarter of 2019 (McMillon, 2019). With the pandemic's uncertainty, the entity's financial position has impressively surged to cater to millions of people in their homes (Tan et al., 2018). A return to normalcy could see a slight decline in sales, but the future economic rebound will increase disposable income, and the integration of e-commerce will help in competitiveness.
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Indeed, Inglis et al. (2015) outline that Walmart is positioned to maximize shareholders' value and profitability in the next ten years due to its business model. With an ideal share price, it is highly likely that the price will likely grow and continue with the market's stability, suitable for high dividends payout in the future. By 2026, the company will have a fundamental value of US $736 billion, and because of its gigantic size, it will remain profitable in a long time (Martinez et al., 2017). Through establishing itself in a diverse retail market, the client can predict a considerable return on their investments. For example, the company's earnings in 2008 were 436 times more than it had earned 15 years prior, representing a 17.82% growth (Brea-Solís et al., 2015). Hence, Walmart’s value is constantly on the rise.
References
Brea‐Solís, H., Casadesus‐Masanell, R., & Grifell‐Tatjé, E. (2015). Business Model Evaluation: Quantifying Walmart's Sources of Advantage. Strategic Entrepreneurship Journal , 9 (1), 12-33.
Inglis, W. G., Pastrana, S. M., & Chang, B. K. (2015). Walmart Versus Amazon Stock: For the Next Ten Years, Walmart has the Most Upside Potential. Retrieved from Economist: https://www.economist.com/sites/default/files/opuscollegeofbusiness_ws.pdf
Martínez, A. B., Galván, R. S., & Alam, S. (2017). Financial Analysis of Retail Business Organization: A Case of Wal-Mart Stores, Inc. Nile Journal of Business and Economics , 3 (5), 67-89.
McMillon, D. (2019). 2019 Annual Report Defining the Future of Retail. Retrieved from Walmart-2019-AR-Final: https://s2.q4cdn.com/056532643/files/doc_financials/2019/annual/Walmart-2019-AR-Final.pdf
Tan, B., Yan, J., Chen, S., & Liu, X. (2018, December). The impact of blockchain on food supply chain: the case of Walmart. In International Conference on Smart Blockchain (pp. 167-177). Springer, Cham.
