Professional financial analyst

Professional financial analyst

In the world of investment, we have more than 10,000 stocks that we are able to choose to invest. Consequently, people must choose the best stock that will return the most profit. However, the best way to identify the best company that show the best performance should be analysis companys financial statement. In this paper, I will show the basic financial analyst in case that I have 2.6 million US dollar, and I can choose only one company from two. In this case, I will study two companies, which Wal-Mart and Target. Wal-Mart Overview

Wal-Mart Stores, Inc. (WMT), has branded as Wal-Mart since 2008 and Wal*Mart before then. Wal-Mart is the biggest and leader of retailer market, and it is a n American multinational retailer corporation that runs chains of large discount department store and warehouse stores. According to the Foebes Global 2001 list, the company is the worlds 18th largest public corporation. Also, the company is the biggest private employer in the world with more than two million employees, and of course it is supposed to be the largest retailer in the world. Wal-Mart started at a family business, until now, the company is still controlled by the Walton family who own 40% stock of Wal-Mart. However, The Company was founded by Sam Walton in 1962, incorporated on October 31, 1969, and publicly traded on the New York Stock Exchange in 1972. It is headquartered in Bentonville, Arkansas. Wal-Mart is also the largest grocery retailer in the United States. In 2009, it generated 51% of its US$258 billion sales in the U.S. from grocery business. It also owns and operates the Sams Club retail warehouses in North America (Munarriz). Wal-Mart has 8,500 stores in 15 countries, under 55 different names. The company does business in nine different retail formats: supercenters, food and drugs, general merchandise stores, bodegas (small markets), cash and carry stores, membership warehouse clubs, apparel stores, soft discount stores and restaurants. (Wal-Mart). The company operates under the Wal-Mart name in the United States, including the 50 states and Puerto Rico. It operates in Mexico as Walmex, in the United Kingdom as Asda, in Japan as Seiyu, and in India as Best Price. Wal-Mart also operates banks that focus on their employees and consumer lending, and also it provides financial services including money order, wire transfers, check, cashing, and bill payment. Target Target is an American retailing company in Minneapolis, Minnesota. It is the second-largest discount retailer in the United States, behind Wal-Mart. The company is ranked at number 38 on the Fortune 500 as of 2011 and is a component of the S&P 500 index (CNN Money).

Professional financial analyst

The company was founded in 1902 in Minneapolis as the Dayton Dry Goods Company, though its first Target store was opened in 1962 in nearby Roseville, Minnesota. Target grew and eventually became the largest division of Dayton Hudson Corporation, culminating in the company being renamed as Target Corporation in August 2000. On January 13, 2011, Target announced its expansion into Canada. Vulnerabilities Wal-Mart Wal-Mart focuses on low-price; consequently, suppliers are away the mean point to get cost of goods as low as possible. However, because of the low price, the customers are almost always wondering and concerned at the quality of the good. This is offset to some extant by the satisfaction guarantees offered. Local competitors like Target, Safe way really the arrival of Wal-Mart on their area because no one is able to sell low price as Wal-Mart, however, competition from local convenience stores is seemly to increase a travel costs to Wal-Mart more that get profit back. In Euro, the expansion of the German retailer as Aldi and Lidl are growing fast. They focus as the Wal-Mart, which is low price. As we know, playing outside home base is almost always adverse, and of course, Aldi has a technic that offer the cheap limited stock in their local. The efficiency being the name of the game with only 1000 stock items against the normal 20,000 20 30,000 items from Wal-Mart (STEPHANIE). Though, Wal-Mart is a big company, the competition from similar companies is easier to attack Wal-Mart weakness point, which is on any ethical stance low pay and poor work conditions, supply of goods from poor cheap labor countries, and environmental issues. Furthermore, it is seemly successful attack because some people agree to boycott product from Wal-Mart. Next, Wal-Mart depends deeply on China for manufacturing its merchandise. It purchases billions of dollars worth of merchandise every year (THOMAS). Additionally, many of the companys suppliers like Mattel (MAT) manufacture their products in China, which in turn are sold in Wal-Mart stores. Wal-Marts imports are substantial. By outsourcing to China, Wal-Mart is able to secure lower costs of inventory, which the company in turn passes on to low prices for customers. Notwithstanding, as a result of its dependency on Chinese manufacturing, Wal-Mart is vulnerable to fluctuations in the value of the dollar when compared to the Chinese Yuan. For example, the dollar weakens compared to the Yuan, the revenue of Wal-Mart Chinese imports would raise (THOMAS) . As that result, the company would either have to raise its prices or would have to cope with narrowed margin of profit, reducing its profitability. Also, the company is vulnerable to adverse guidelines, such as higher tariff. Target Target has carved out a niche for itself as a cheap high-end retailer. In January 2011, Target took its initiative in expanding outside of the US with the leverage of

Professional financial analyst

220 Zellers stores in Canada. Target plans to win over 100 to 150 of these stores by 2013 or 2014, with revenues similar to those of its US counterparts. Target also initiated Red-card promotions with its charge card program, which could increase its revenues. However, rising commodity prices could offset these gains. Target does not have as many stores as their competitor Wal-Mart. Even with Targets stunning publicizing, it makes it difficult for the consumers to shop here when there are not that many stores in town. Besides, although their prices are minimal, they just are not as low as Wal-Mart prices. As a matter of fact, compared to WalMart prices, Target may even seem pricey. An additional mismanagement issue with Target is that they keep a low smash of items, so they run out of items very frequently. Target also concentrates lots on self-service so it can be hard to find what you would like sometimes. The threat number one for Target is Wal-Mart. Despite the fact that they are the number one retailer in the world, they also have very low prices. Financial Trends affecting Wal-Mart and Target Many analysts have found three main trends working against retail store. According to those theories, Wal-Mart and Target are losing shoppers and both are falling behind in the digital revolution. In conclusion, there are too many employees out there basking Wal-Mart failures. These stores have to wake up and shift themselves properly. Stressed-out consumers The most usual hypothesis behind Wal-Mart decline is that the similar people who traded down to Wal-Mart during the darkest recessionary stretches in late 2008 and early 2009 are now simply trading back up to more chic very cheap discounters or old fashioned department stores. Wal-Mart is now leaning on its longtime customers, and that is a dicey proffer when economic uncertainness and sky-high unemployment rates are thinning out what little discretional income they antecedently had. The trend is real, but it does not explain away all of Wal-Mart problems. After all, we have to assume that same-store sales will spike higher if we dive back onto a recession. Weak navigation of the digital divides Some consumers do not want to be seen at a Wal-Mart, and obviously, they do not want to be seen using walmart.com, either because people afraid their rumor about their financial situation. It would be another negative Wal-Mart's image about cheap cost. Wal-Mart announced a major organizational restructuring of its online operations. But things intelligibly are not going too well in internet, no matter if WalMart penchant for low prices should sell easily when shoppers do not have to navigate through massive park and immense superstores to save a few dollars at the slow moving registry.

Professional financial analyst

In fact, Wal-Mart, despite being the worlds highest-grossing retailer, is lagging behind several bricks-and-mortar chains, including office supply specialists Staples (SPLS) and Office Depot (ODP), in e commerce. Wal-Mart is not doing itself any favors on it front. Truly, after eight years of selling music downloads, walmart.com is shutting down its MP3 store. The digital convergence of traditional media is here. Teens are downloading music, movies, games, and novels, and it is eating into the physical sale of CDs, DVDs, computer game, and books. No one understands then why Wal-Mart would turn its back on the one musical data format that is growing while its stores stay with stock cobweb-collecting boring CDs. Now the question should be how will Wal-Mart ever become an online retailing force when its digital offerings are about to become lamentably incomplete. Haters Unfortunately, many people would like to see Wal-Mart fail. They hate the way the costumer service operators deal with consumer. Actually, anybody could inform to Wal-Mart that frantic inventory turns creates the chance for low and unfair markups on items. If people save money at Wal-Mart, the money saved should probably work on the way back into the community in somehow. However, Wal-Mart has never had a problem getting its value message out there. It was selling MP3s for less than iTunes, but apparently that did not matter to ear bud-donning e-shoppers. Target (TGT) gets slapped with the cheap chic label, but it wears it with pride. Now, here is an easy experiment. Post "Im going to Target on Facebook and favorable responses will trickle in, peace". Lets consider about this situation by ask yourself when was the last time you saw someone bragging about going to Wal-Mart through Facebook or Twitter. The closest thing Wal-Mart had to being cool was in 2008 when it put out exclusive The Eagles and AC DC CDs. It could have aimed younger or at least timely but at least it was able to get recording legends to commit to the discounter. Wal-Mart attained the top of the Fortune 500 in 2001 (CNN Money), becoming the largest corporation in the United States, and has stayed there annually since except 2006. But what makes investors really smile is that Wal-Mart is still expanding, offering the opportunity for growth in share values. How the stock will perform in the future Investing in Wal-Mart stock is a smart choice for a number of reasons. It appears to offer a good return, with a solid PE ratio and a good but not unreasonable dividend. Management seems to know what it is doing, and Wal-Mart seems to be positioning itself to be an efficient and successful company worldwide. Wal-Mart is seemly to promise a good return because its rating is reasonable. Unluckily, Wal-Mart been charged of bribing officials in Mexico to grow its business. But generally it is not enough for America seemly to care. The stock fell down only modestly from its highs for one week, then, the stock reclaimed from the

Professional financial analyst

drop off point to the lows of February. Seemly, Wal-Mart is trying to defend and extend dreadfully outdated industrial techniques. I prefer Target stock, the stock that I think I will hold its ground even in a double dip recession coupled with inflation, and it will extremely take off if the economy stages a recovery. Target management knows about customers cash flow troubles, and has rolled out the RED card credit card opening, which gave customers a 5 % discount for shopping at Target, to huge achiever. Target also has a very low cost base, owning most of its stores straight out and therefore not spending on leases. These factors have led to Target staying in the black throughout the recessional despite poorer gainfulness. I believe that Targets customers have already retrenched all that they can, and that sales at Target have reached their nadir. Target has yet to saturate its core domestic market. Wal-Mart has some 30004000 stores in the US, while Target has relatively paltry 1750 stores. Management expects that an expansion to 2500-3000 stores is reasonable in the US market. Target is expected to sell its receivables to a financial company in the future, a step, which should bring in cash for its current expansion, as well as clear up any misgivings about the valuation by bringing in an independent set of eyes. This will also turn TGT into a pure play retailer again, which would make it easier to analyze for retail analysts. Recommendations As a result, I will notice that Wal-Mart has a much higher receivables turnover than Target because it keeps a very low balance of receivables as a percentage of assets. Therefore, I am not focused with the existent number here ; the more important part should be the trend. Also, Wal-Mart receivables turnover has gone down each year since 2007. Despite Wal-Mart sales up around 20 % over during time, the company has taken on around 70 % more receivables. Target, however, has slightly developed its receivables turnover since 2008. When looking the inventory number, Target and Wal-Mart have gone in opposite ways. Targets number went down for two years then has reversed, during Wal-Mart went up for two years and has decreased. Wal-Mart higher number should mean that it is getting more inventories pushed through the system, but if the trend retains, Target will be catching up. Wal-Mart has a large number for all three-turnover ratios, but the recent trend has been better for Target, despite the lower numbers. By looking at these numbers, we might realize that WalMart has higher sales and a larger asset base, so they sometimes have more flexibility to get stuffs done. However, you might look at the trend, and Target has the advantage there. Indeed, both companies are rather solid. Wal-Mart has a bunch of higher numbers, but Target has been doing better as lately in certain respects to costumer, and of course the business should focus on consumer's loyalty in this era. However, both of these names are quality investments, and would add a nice piece on your portfolio.

Professional financial analyst

Works Cited THOMAS C. HAYES (2002). Suppliers Support Wal-Mart in Ads. New York Tine. Retrieved from http://www.nytimes.com/1992/12/25/business/supplierssupport-wal-mart-in-ads.html STEPHANIE CLIFFORD (2011). Where Wal-Mart Failed, Aldi Succeeds. New York Tine. Retrieved from http://www.nytimes.com/2011/03/30/business/30aldi.html?_r=1&pagewanted=all Rick Aristotle Munarriz (2011), The Motley Fool, Daliy Finance, Retrieved from http://www.dailyfinance.com/2011/08/16/why-wal-mart-will-never-be-greatagain/ CNN Money (2011). Retrieved from http://money.cnn.com/magazines/fortune/fortune500/2012/full_list/