Target therefore appears to be less recession-proof than Wal-Mart, and this may be related to the latter company's superior geographical diversification.
Both companies have healthy balance sheets. Wal-Mart's tight margins meant that it traditionally has what in some companies would be considered poor liquidity (current ratio below 1) but in general Wal-Mart has a stable balance sheet. The company's capital structure is debt-oriented, with 62% liabilities. Target is a much smaller company than is Wal-Mart, with assets only one-quarter those of the Arkansas giant. Target has healthier liquidity but as with Wal-Mart maintains a debt-heavy capital structure of 64.5% liabilities.
At the most basic level, both of these firms represent good investments. They are strong firms with healthy balance sheets and the ability to continue to grow revenues -- and for the most part profits -- even during the past few difficult economic years. The companies are trading at relatively low multiples and each is in a favorable position within its 52-week range.
However, Wal-Mart represents the superior investment of the two. In addition to being the industry leader and having better geographic diversification, Wal-Mart was able to increase profits even during the recession. Furthermore, Wal-Mart has a consistently better ROI, implying that the company's operations...
WMT v TGT II Environmental Analysis The environment shared by Wal-Mart and Target can be analyzed by answering a number of questions about the nature of the industry and its key success drivers. Both firms compete in the discount retail industry, which is a large segment of the broader retail industry. Firms in discounting typically offer a wide range of goods but compete primarily on price (Investopedia, 2011). Within the broader retailer
Target Corporation and Wal-Mart Stores, Inc. The companies being analyzed are Target Corporation and Wal-Mart Stores, Inc. They are general merchandise retailers. They compete in the large-store general merchandise market, especially in the discount store segment and the U.S. geographic market. Target Corporation's Store Brands in multiple formats are Target, Super Target, Mervyn's, Marshall Field's, Target Direct and Target Visa. Target operates 1409 stores in 47 states in the United States
MSN Moneycentral (2011), the beta for Wal-Mart (WMT) is 0.33. This indicates that the company has a very low degree of correlation with the broader market, and is a less volatile investment than the broad market. According to Yahoo! Finance (2011), the rate of return on a one-year U.S. Treasury bond is 0.318%. It is assumed that the market risk premium is 7%. This assumption means that the market rate
Finance Assessing WalMart Cost of Equity Cost of Equity Using CAPM To calculate the cost of equity using the capital asset pricing model (CAPM), the equation requires collection of some data regarding the firm and the market. The equation tells us what data is needed, the equation is cost of equity = RF + ?(RM - RF). RF is the risk free rate, RM is the return on a market portfolio, and ?
Most significantly, organizations and shareholders may be familiar with projects that are on their own terrain (local) and thus more equipped to guarantee a higher IRR. Either way, IRR should only be used to decide whether a single project is worth investing in. The disadvantages of using ROE in foreign investments is that ROE is commonly used to compare businesses that are in the same industry and since countries have
Wal-Mart Target Wal-Mart and Target are two of the leading retailers in the world. Wal-Mart is one of the world's largest companies and Target is one of its primary competitors. While the both succeed based on similar competencies in logistics and merchandising, there are significant differences between the two that lead to different financial results. Wal-Mart is by far the larger, and this allows it to execute the cost leadership business
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