WMT - Wal-Mart

**dchamber** Mon Feb 06, 2006 2:51 pm

WMT - Wal-Mart
WMT
Current P/E is 17.7. The average annual P/E has never been this low since 1989 (the oldest data I have).
The current ratio is .9. I prefer it to be over 2 but the industry average 1.1. This is still a little low for me.
Average ROE has increased steadily, and at a good rate for the last 10 years.
The book value has is growing steadily at about 16% a year.
Analysts predict an EPS growth rate of 13.5% which is in-line with the 15% growth rate over the last 10 years.
If WMT can trade at its average P/E in 10 years we are looking at a share price of $250-$270 including dividend.

That’s an annual return of over 19% a year.

I’m worried about the current ratio being below a one. I think a 19% provides return, combined with the low current ration of the industry mitigates this risk.

I’m also concerned about the growth potential of Wal-Mart. Is it too big to grow at this rate?

And the average P/E is mush higher that the current industry P/E. Is it valid to assume they can trade even close to this P/E in the future?

**blast_investor** Mon Feb 06, 2006 6:02 pm

Just add note here, Warren Buffet invested into Wal-mart stock fairly recently.