As of September 19, 2016, Walmart (WMT) was trading at a 12-month forward PE (price-to-earnings) multiple of 16.6x, which is slightly above its YTD average forward PE of 16.4x. Its current valuation multiple is lower than the S&P 500 Consumer Discretionary Index with a forward PE of 17.7x and the S&P 500 Index with a forward PE of 17.3x.
Comparison with its peers
Below are the 12-month forward PEs as of September 19, 2016, for Walmart’s peers:
- Target (TGT): 13.5x
- Costco (COST): 25.4x
- Kroger (KR): 14.2x
- Dollar Tree (DLTR): 19.7x
- Dollar General (DG): 15.4x
- Whole Foods Market (WFM): 19.0x
Forward PE is influenced by several factors, including growth rates, risk, and uncertainties. Currently, analysts expect Walmart’s fiscal 2017[1. Fiscal 2017 ending on January 31, 2017.] sales to rise 1% to $486.9 billion and adjusted EPS (earnings per share) to fall 5.7% to $4.33. Walmart’s bottom line is expected to be adversely impacted by wage increases and growth investments.
Walmart makes up 3.1% of the iShares Global Consumer Staples (KXI).
Walmart’s earnings expectations
In August 2016, Walmart increased its fiscal 2017 adjusted EPS guidance to $4.15–$4.35 from the previous guidance of $4–$4.30. This guidance included $0.05 of estimated dilutive impact to EPS due to the $3.3 billion Jet.com acquisition.
Walmart announced its completion of the Jet.com acquisition on September 19, 2016. After the earlier-than-expected closing of the acquisition, Walmart now expects the deal to have a marginally higher dilutive impact on its fiscal 2017 bottom line than the initial estimate.
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