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The Company I’m assigned is Walmart. This is financial analysis 3rd segment. I have provided the 1 and 2 i submitted earlier just for reference. I have attached the questions as well.
Finance Analysis Segment 3 Questions
Download the Value Line of the company on which you will answer 4 of the following questions. For each question you choose to not answer, type “skip” in your paper.
For each answer, do not forget to include analysis from the balance sheet, income statement, and cash flow statement . Concepts to include are assets, debt, equity, net income, dividends, retained earnings, cash flows, sales, earnings, interest expense, and stock price .
Assume the Value Line is current. You are free to make assumptions as you conduct the analysis but just be sure to state them clearly in your answers.
Do not waste time searching for other analysts’ information and referring to it. You are assessed based on your unique discussion, not on your ability to parrot other people’s work. Other than the Value Line, you need no other outside information.
Finance – general questions – Pick 4 to answer.
1. Discuss the current macroeconomic environment, including the current interest rate environment, and how the current policies and conditions should affect the performance of the firm’s industry and the capital structure of the firm. How will equity and debt investors respond?
2. Choose to discuss either the firm’s equity or debt. Regarding industry structure and performance, what industry-specific characteristics of the structure of the firm’s industry are beneficial for the equity/bond? What industry-specific characteristics are not beneficial for the equity/bond? How will equity and debt investors respond?
3. Discuss the entry barriers for new competitors in this industry? Say that the firm is considering an expansion. What are some of the financial and investment considerations that should come into play? How will equity and debt investors respond? Relate the entry barriers to the firm’s financial statements.
4. What fixed costs does the industry have and how do these costs affect financial performance? How will equity and debt investors respond? How can your firm increase revenue, net income and stock price in this situation?
5. Is the firm’s dividend policy appropriate? How will equity and debt investors respond? How does this policy affect the firm’s long-run financial performance? How does this policy affect the stock price?
6. Is the firm’s overall cash position healthy? Discuss the firm’s current cash flow status. What are some things that the firm can do to better its cash position? How will equity and debt investors respond? How does this policy affect the firm’s long-run financial performance? How does this policy affect the stock price?
7. What inventory constraints do the firm or the firm’s customers face? How do these constraints affect purchase decisions, inventory management systems, and cash flow? How does the current trade situation affect inventory management for this firm? How will equity and debt investors respond? How does this policy affect the firm’s long-run financial performance? How does this policy affect the stock price?
Remember for each question: Discuss in general terms of the financial statements and concepts from corporate finance and valuation along with a specific discussion of your assigned firm.
1
Financial Ratio Analysis 2: Walmart
Alex Finn
College
Professor
BUSI 570- Managerial Finance
April 12th 2026
In this paper, the intrinsic value of Walmart Inc. has been estimated based on four valuation models namely, Constant Growth Dividend Model, Discounted Cash Flow (DCF), Price-to-Earnings (P/E) and Price-to-Sales (P/S). It also makes comparisons of these estimates and the current market price and clarifies discrepancies.
Valuation Models
| Financials | Amounts (Walmart Inc., 2026) |
| EPS (Diluted) | $2.73 |
| Dividends per share (D₀) | $0.94 |
| Shares outstanding | 8.02 billion |
| Revenue | $713.16 billion |
| CFO | $41.57 billion |
| CapEx | $26.64 billion |
Market data
· Current price (P₀) ≈ $126.77
· Beta (β) = 0.66 (Yahoo Finance, 2026)
· Risk-free rate (Rf) = 4.31% (10-year US Treasury)
· Market return (Rm) = 11% (given in assignment)
Growth assumption
· Walmart’s growth rate 6% (StockAnalysis, 2026)
CAPM (Expected Return)
Substitution
Expected return
3. Constant Growth Dividend Model
Formula
Compute next dividend
Compute price
Dividend model value
4. Discounted Cash Flow (DCF)
Step 1: Compute FCFE
Step 2: FCFE per share
Step 3: Forecast (5 years, g = 6%)
| Year | FCFE |
| 1 | 1.97 |
| 2 | 2.09 |
| 3 | 2.22 |
| 4 | 2.35 |
| 5 | 2.49 |
Step 4: Terminal value
Step 5: Discount to present
Using :
· PV (Years 1–5) ≈ 8.6
· PV (Terminal) ≈ 29.5
Final DCF Value:
5. P/E ratio valuation
Walmart P/E ≈ 45.01x
Formula:
P/E value
6. P/S ratio valuation
Step 1: Sales per share
Walmart p/s: 1.37
P/S Value:
Comparison with market price
The current price of Walmart in the market is around 126.77 (Yahoo Finance, 2026). The valuation outcomes are:
· Dividend Model: $36.63
· DCF Model: $38.10
· P/E Model: $122.88
· P/S Model: $121.79
The market price is much more than the intrinsic values of the dividend and DCF models but in line with the relative valuation models.
Explanation of discrepancies
The differences are due to the variations in methodology and assumptions. The Dividend Discount Model and DCF are based on the conservative growth and cash flow estimates. Walmart also has high re-investment and capital expenditure, which decreases the free cash flow and lowers the valuations.
Conversely, the P/E and P/S models are indicative of the market sentiment and investor expectations. Walmart is considered a large and stable retailer that has high growth opportunities in e-commerce and digital activities. These expectations are factored in its market price and this is why these models generate values that are closer to the observed price.
Also, growth rate and required return are some of the assumptions that are sensitive to valuation models. A small variation in these inputs can make a big difference especially in the dividend model where growth and the rate of return are near each other.
Growth rate justification
The growth rate of 6% is based on analyst forecasts of Walmart’s future earnings and revenue growth obtained from StockAnalysis (2026). This is a rate that indicates the maturity and stable growth prospects of Walmart and is therefore a reasonable and defendable assumption.
Expected return using CAPM
The capital asset pricing model is used to determine the expected return: which gives a return of 8.72, indicating that it has a low systematic risk.
Conclusion
Overall, Walmart seems to be a bit overvalued according to intrinsic valuation models but fairly valued according to market-based multiples. The variations underscore the significance of assumptions, investor expectations, and constraints of valuation methods.
References
StockAnalysis. (2026). Walmart Inc. (WMT). Retrieved from: https://stockanalysis.com/stocks/wmt/
U.S. Treasury. (2026). 10-year Treasury constant maturity rate. Retrieved from: https://home.treasury.gov/
Walmart Inc. (2026). Investor relations. Retrieved from: https://stock.walmart.com/
Yahoo Finance. (2026). Walmart Inc . (WMT) statistics. Retrieved from: https://finance.yahoo.com/quote/WMT/
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