This chapter stressed the importance of evaluating potential investments. Now it’s your turn to try your skill at evaluating a potential investment in the Walmart Corporation. Assume you could invest $10,000 in the common stock of this company. To help you evaluate this potential investment, carefully examine Exhibit 14-7, which reproduces the research report on Walmart from Value Line.

The report was published on January 24, 2020.

Questions 

1. Based on the research provided by Value Line, would you buy Walmart’s stock? Justify your answer.

2. What other investment information would you need to evaluate Walmart's common stock? Where would you obtain this information?

3. On January 24, 2020, Walmart’s common stock was selling for $116 a share. Using the internet, determine the current price for a share of Walmart’s common stock. Based on this information, would your investment have been profitable if you had purchased the common stock for $116 a share?

4. Assuming you purchased Walmart’s stock on January 24, 2020, and based on your answer to question 3, would you want to hold or sell your Walmart stock? Explain your answer.

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WALMART INC. NYSE-WHIT TIMELINESS 1 Raised 12/27/19 SAFETY 1 Raised 2/15/02 TECHNICAL 2 Raised 1/3/20 BETA 75 (1.00- Market) 18-Month Target Price Range Low-High Midpoint (% to Mid) $89-$134 $112 (-5%) 2022-24 PROJECTIONS Ann'l Total Price Gain Return High 170 (+45%) 12% Low 140 (+20%) 7% Institutional Decisions to Buy to Sell High: 63.8 57.5 56.3 43.1 46.3 47.8 Low: LEGENDS - 120 x "Cash Flow" p sh Relative Price Strength Options: Yes Shaded area indicates recession *** Perbent sblattts. RECENT DIV'D P/E Tralling: 23.4 RELATIVE PRET 116.18 RATIO 22.8 (3.0) PRATO 1.23 1.9% ** ..... --سالم 60.0 77.6 81.4 88.1 91.0 75.2 100.1 100.1 110.0 125.4 48.3 57.2 67.7 72.3 56.3 60.2 65.3 81.8 91.6 A הה" יו "Th 111. 1. Target Price Range 2022 2023 2024 1 yr. 3 yr. 5 yr. ‒‒‒‒ -200 -160 % TOT. RETURN 12/19 THIS VL ARITH.* STOCK INDEX 102019 202019 302019 30.2 23.6 887 894 878 835 84.2 26.5 870 832 H000) 854942 868976 874047AA toldod 42.2 2010 2011 2012 2013 2014 2015 2016 217.50 11.30 5.20 Earnings per sh AB 7.10 56.8 2003 2004 2005 2006 2007 2008 2009 2017 2018 2019 2020 VALUE LINE PUB. LLC 22-24 60.00 68.02 75.79 84.40 95.34 103.34 107.82 119.98 130.76 141.57 147.32 150.45 152.48 159.41 169.49 178.74 186.90 197.75 Sales per sh A 2.95 3.47 3.78 4.27 4.83 5.16 5.64 6.42 6.92 7.69 7.92 7.93 7.64 7.72 8.07 8.73 8.95 9.35 "Cash Flow"par sh 2.03 2.41 2.63 2.92 3.16 3.42 3.66 4.07 4.45 5.02 5.11 5.07 4.57 4.32 4.42 4.91 5.00 .36 52 .60 .67 .88 .95 1.09 1.21 1.46 1.59 1.88 1.92 1.96 2.00 2.04 2.09 212 10.12 11.67 12.77 14.91 16.26 16.63 18.69 19.49 20.86 23.04 23.59 25.22 25.47 25.52 26.38 25.19 26.70 4311.0 4234.0 4165.0 4131.0 3973.0 3925.0 3786.0 3516.0 3418.0 3314.0 3233.0 3228.0 3162.0 3048.0 2952.0 2878.0 2830.0 2765.0 26.9 22.8 18.3 16.0 14.9 16.2 13.9 13.1 12.4 13.5 14.9 15.4 15.5 16.2 18.6 18.7 Bold figures are 1.53 1.20 97 .86 .79 .97 .93 .83 78 .86 84 81 .78 .85 .94 1.01 .7% .9% 1.2% 1.4% 1.9% 1.7% 2.1% 2.3% 2.7% 2.3% 2.5% 2.5% 2.8% 2.9% 2.5% 2.3% 2.80 32.00 2.16 Div'ds Decl'd per sh 27.80 Book Value per sh Common She Outsi'g D Avg Ann'l P/E Ratio Relative P/E Ratio 2600.0 22.0 1.20 Value Line estimates Avg Ann'l Div'd Yield -100 -80 -60 -50 -40 -30 -20 1.8%