Steady Growth Expected for Wal-Mart’s Stores & Margins Outside the US
As Wal-Mart’s (NYSE:WMT) core US market becomes saturated with Wal-Mart stores and competing stores from Best Buy (NYSE:BBY), Costco (NASDAQ:COST) and BJ’s Wholesale (NYSE:BJ), the company is increasingly looking for growth internationally.
Wal-Mart’s International (non-US) business accounts for 33% of the $65 Trefis price estimate for Wal-Mart’s stock. The Trefis price estimate represents about a 30% upside to the current market price of $50.
The Trefis price estimate for Wal-Mart’s stock is quite sensitive to (1) Wal-Mart International Gross Profit Margin and (2) Number of Wal-Mart International Stores. Trefis members have created forecasts for both of these key drivers over the last week. Their forecasts are slightly more bullish than estimates from in-house Trefis analysts and suggest that Wal-Mart’s international margins will hold as its store count continues to increase. Below are charts showing recent estimates created by Trefis members for the two drivers in detail.
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1. Wal-Mart International Gross Profit Margin
The average of Trefis member forecasts for Wal-Mart International Gross Profit Margin indicate an increase from around 26% in 2010 to around 27% by the end of the Trefis forecast period, in line with baseline Trefis estimates. The member estimates imply a small upside to the Trefis price estimate for Wal-Mart’s stock. In the past, Wal-Mart International Gross Profit Margin has increased from around 26% in 2006 to 26.4% in 2009.
Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of Wal-Mart’s stock to Wal-Mart International Gross Profit Margin.
Our complete analysis for Wal-Mart International Gross Profit Margin is here.
2. Number of Wal-Mart International Stores
The average of Trefis member forecasts for Number of Wal-Mart International Stores indicate an increase from 4,525 in 2010 to 6,366 by 2016, compared to the baseline Trefis estimate of an increase from 4,472 in 2010 to 6,182 by the end of the Trefis forecast period. The member estimates imply an upside of 1% to the Trefis price estimate for Wal-Mart’s stock. In the past, Number of Wal-Mart International Stores has increased from 2,285 in 2005 to 4,112 in 2009.
Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of Wal-Mart’s stock to Number of Wal-Mart International Stores.