On Thursday 17th of November WMT published Q3 results. As you know I am long WMT so I closely look what’s going on in company. Let’s see:

Financial presentation begins with guidance, slightly higher for FY2017, with adjusted EPS of $4.20 to $4.35 (previously $4.15 to $4.35) – well 1% is not a big change for me, but direction is OK.


Well if we look on the table above we can see that sales was flat, which taking into account acquisitions is not good, but at the end of the day I do not expect WMT to grow too fast. It is traditional, stable business. What I expect is hefty dividend/buyback:


Market cap is $215b and returned capital for Q1-3 is $11b. Assuming proportionally gives us around $15b return, so it is around 6.8%. Well done WMT, keep going!

As it comes to valuation (on next year consensus):

P/E = 16


Dividend yield = 3% (+ buyback)

For me valuation now is neutral. Remember that business I stable and not growing so fast (though I think buying e-commerce business is a good step). On the other hand there should be a premium in valuation for strong market position and quality. P/E 16 vs P/E ratio for S&P around 25 and P/E ratio for Aristocrats around 21 (my google docs shows only 17.7 for next year but I guess that growth of earnings is too optimistic, I will need to check it) is still not expensive. Also return yield of almost 7% is a very good result.


Summing up, valuation is neutral for me, business is doing OK (could be better, but it is OK), when I find another interesting opportunity to invest maybe I will sell WMT and buy it. For now I will keep my position.


Disclosure: WMT – long