An investment advisor of a brokerage firm Sabrina Gupta was studying stocks and valuation of Wal Mart Stores Inc. Wal Mart founded by Sam Walton was the one of world’s largest retailer store operating in all 50 states and internationally in many countries. The immensity of Wal Mart operations can be estimated by the fact that it had 2.1 million employees who served around 200 million customers per week. The purpose of Gupta’s assessment and valuation of Wal Mart stocks was to determine whether she should urge her new and existing clients to incorporate these stocks in their portfolio.
Cash Flow Statement
Earnings and Dividends
Price of Stock
Constant Dividend Growth Model
Dividend and Terminal Value
Price Earning Multiple Approach
Three Stage Approach
1. As of February 2010, what is your assessment of the worth of Wal-Mart’s stock? Utilize all of the methods discussed in the case of value shares, including the following:
a) The perpetual growth in dividends.
b) Forecasted dividends for the next several years plus sale of the stock in the future.
c) The price/earnings approach. 2. Clearly state any assumptions.
3. Based on your analysis, as Sabrina Gupta, what recommendation would you make? Keywords
Merchandising, Stock valuation