1 / 20

Drug Stores: Walmart

Drug Stores: Walmart. : The final countdown. to the final valuation. of ultimate destiny. Eric Biro. Industry at Large. Walmart – retailer, 15% of net sales in 2 divisions from health and well-being Express Scripts – PBM Walgreens – pharmacy

jeslyn
Télécharger la présentation

Drug Stores: Walmart

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Drug Stores: Walmart : The final countdown • to the final valuation • of ultimate destiny Eric Biro

  2. Industry at Large • Walmart – retailer, 15% of net sales in 2 divisions from health and well-being • Express Scripts – PBM • Walgreens – pharmacy • CVS/Caremark – PBM and pharmacy

  3. Valuation Method • Reformulate balance sheet/income statement • Adjust for off-balance sheet accounts • Determine line-by-line growth rates from 2014 to 2015 • Use growth rates/judgment to project to infinity and beyond! (okay, just 2024) • Forecast using NEA, EPAT • Value firm • ??? • PROFIT (through the purchase/sale/holding of shares)

  4. NEA with Adjustments

  5. EPAT with Adjustments

  6. Sales Forecast • Based on historical company results • 10-K and MD&A • Intl. acquisitions, FCPA, inefficiencies • Earnings call • Analyst predictions • Walmart • Retail industry • The most judgmental – and important – part of the valuation • Includes membership income (minor effect)

  7. EPM Forecasts

  8. EATO Forecasts • ... are on the next slide since it’s too big to have a title, • but I still wanted to let you know what’s coming next, • so we have another picture • of Trevor creepily enjoying • rather large ice cream cone

  9. Full Information Forecasts

  10. Before we get WACC…

  11. Walmart is WACC, dawg. • Following valuations are very sensitive to changes in the WACC • 1% change around chosen discount rate (6.45%) changes implied share value by $40.00

  12. DCF Model

  13. Residual Income Model

  14. American Model • Whoops!

  15. Abnormal Earnings Model

  16. Buy/Hold/Sell? • BUY • Implied share price is significantly higher than the current market price • If discount rate 7.00%, implied price is $95.00, much smaller difference

  17. Rationalizations for such a massive difference Walmart’s Strengths • Why would this be such a strong buy recommendation? • Market leader in low-margin consumer products • Continuing expansion, especially international – a big part of increased sales • Increasing use of online offerings/operations • Brand name strength

  18. Where Could I Have Royally Messed This Up? • Most everywhere! There are assumptions all over the place. • If sales decline, everything could be very different, quickly • Working with large numbers, any small change makes a massive difference • Beta selection – most in the same general window • If performance drops from 2013 -> 2014 are more than just a one-year occurrence, most forecasts out the window • If international expansion/acquisitions slow, sales forecasts will be off • What’s hiding? • Over-aggregation – hard to make out potential trends

  19. Questions?

More Related