In this article I am going to analyze Walmart Inc, which its ticker (WMT) based in its earning per share (EPS) and its (P/E) ratio to see how much its stock will worth in the 2027.
First, let see how does WMT’s EPS did in the past six year starting form 2017 in order to estimate its growth rate, as shown below:
Since the EPS of Walmart dropped below zero for year 2022 where it was (-0.66) it will be unfair to evaluated the company using its EPS. Therefore I am going to use the company sales and its (P/S) ratio to come up with its fair value in year 2027.
As you can see from the above chart that Walmart Sales was going in uptrend and increased from 123.2 Billion in 2017 until it reached to 158.2 Billion in year 2022 with growth rate 5.13%.
Now that we have the growth rate of WMT sales in the last five years, we are going to use this growth rate to estimate what will its sales be in 2027 ,which is five years from now by applying the following formula:
FV=PV(1+i)n
- Where
- PV = WMT sales in year 2022 = 158.2 Billion.
- i = growth rate of WMT sales estimated above = 5.13%
- n = years of investment = 5 years in 2027
By substitute the numbers estimated early in the above formula, I end up with Walmart sales in year 2027 equal to 203.16 Billion$.
Now, I have to see what was (P/S) ratio that WMT did have in the last six years, which as shown below:
Now we can estimate two scenarios for WMT stock price which is Bull market and the bear market.
For Bull market, I am going to take the highest (P/S) ratio which was 0.72 in year 2021, to see what will be the price of WMT stock in 2027:
Bull market WMT Stock’s price in 2027= (0.72)*(203.16 ) = 146.3$.
For Bear market, I will take the lowest (P/S) ratio which was 0.48 in year 2018, to see what will be the price of WMT stock in 2027.
Bear market WMT Stock’s price in 2027= (0.48)*(203.16 ) = 97.5$.
As of writing this article, Walmart Inc. stock price is 146.66$ which is almost equal to its estimated price after five year from now in bull market. Therefore, I believe Walmart’s stock is not good opportunity for investment.
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