Analysis of Wal-Mart Financial Ratios, P/B

Walmart’s P/B ratio is quite high for a company in its industry. Based on this value of 2.77, I would lean toward not investing because Walmart will be expected to return a value for ROE that I don’t think is reasonably feasible in the long-term for the company. Walmart’s forward P/E is low for a company in its industry, standing at 12.90. While lower than other companies in its industry, Walmart’s low P/E ratio simply suggests that the company is expected to grow earnings at a slower pace, but could also mean that the stock has some upside room to move. Walmart’s 1.08 PEG ratio suggests the company’s stock may be overpriced, however the ratio is close enough to 1.00 that I feel comfortable giving less weight to it when making an investment decision. As a practical investor, I know that Walmart has continued to produce growth in earnings, income, and dividends in a historical context, leading me to view Walmart stock as a “buy.” As an analyst, however, the evidence suggests to me that there may be a better time to buy Walmart stock. The expectation of slow earnings growth, an expected ROE that is much higher than average, and a PEG ratio that suggests the stock may be overpriced lead me to say “no” to WMT as an investment.

Other posts on Wal-Mart financial analysis:

Wal-Mart: Comparison of ROCE for Wal-Mart’s Alternative Cash Management Strategies
Analysis of Wal-Mart Financial Ratios
Analysis of Wal-Mart Financial Ratios, P/E Growth
Analysis of Wal-Mart Financial Ratios, P/B
Wal-Mart: A Potential Management Issue Resulting from Excess Cash
Analysis of Wal-Mart Financial Ratios P/E, V/E
Wal-Mart in the News, Adoption of Eco-Friendly Activities