Author Topic: WMT - Walmart Inc  (Read 51065 times)

Palantir

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Re: WMT - Walmart Inc
« Reply #40 on: October 15, 2015, 06:04:05 AM »
With 28B ocf-12b capex, we get 16b fcf/235=6.8% cf yield, hardly compelling. Assuming capex is all maintenance since there is such little growth.
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dwy000

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Re: WMT - Walmart Inc
« Reply #41 on: October 15, 2015, 06:46:42 AM »
With 28B ocf-12b capex, we get 16b fcf/235=6.8% cf yield, hardly compelling. Assuming capex is all maintenance since there is such little growth.

Market cap is down to $190 after yesterday.  I haven't researched it but they claim $11bn capex going forward.  And they specifically stated the $80bn in cash being added over the next 3 years in the press release.  But they don't derail how that is calculated (maybe asset sales in there or better working capital if they aren't opening stores).

Still, 40% of market cap in cash over the next 3 years is pretty compelling, especially if the underlying business continues to grow over that period (albeit very slowly).

Jurgis

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Re: WMT - Walmart Inc
« Reply #42 on: October 15, 2015, 06:57:00 AM »
There's no way they gonna do $80b-over-3-years FCF if you include maintenance capex.

$80b-over-3-years is OCF.
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Palantir

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Re: WMT - Walmart Inc
« Reply #43 on: October 15, 2015, 07:02:06 AM »
With 28B ocf-12b capex, we get 16b fcf/235=6.8% cf yield, hardly compelling. Assuming capex is all maintenance since there is such little growth.

Market cap is down to $190 after yesterday.  I haven't researched it but they claim $11bn capex going forward.  And they specifically stated the $80bn in cash being added over the next 3 years in the press release.  But they don't derail how that is calculated (maybe asset sales in there or better working capital if they aren't opening stores).

Still, 40% of market cap in cash over the next 3 years is pretty compelling, especially if the underlying business continues to grow over that period (albeit very slowly).

Are you adding back 49b debt? Idk if they have a pension liability. That 80b cf has to be OCF, as noted above. Forgot to add back 2b interest, so 18/235= 7.7% yield, which is okay....
« Last Edit: October 15, 2015, 07:05:29 AM by Palantir »
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dwy000

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Re: WMT - Walmart Inc
« Reply #44 on: October 15, 2015, 08:13:17 AM »
With 28B ocf-12b capex, we get 16b fcf/235=6.8% cf yield, hardly compelling. Assuming capex is all maintenance since there is such little growth.

Market cap is down to $190 after yesterday.  I haven't researched it but they claim $11bn capex going forward.  And they specifically stated the $80bn in cash being added over the next 3 years in the press release.  But they don't derail how that is calculated (maybe asset sales in there or better working capital if they aren't opening stores).

Still, 40% of market cap in cash over the next 3 years is pretty compelling, especially if the underlying business continues to grow over that period (albeit very slowly).

Are you adding back 49b debt? Idk if they have a pension liability. That 80b cf has to be OCF, as noted above. Forgot to add back 2b interest, so 18/235= 7.7% yield, which is okay....

I didn't add back debt because, even using OCF that's after debt service (so just equity cash flows). 

wachtwoord

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Re: WMT - Walmart Inc
« Reply #45 on: October 21, 2015, 12:41:09 AM »
I'm considering freeing up some cash for this. Thanks for the discussion.
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johnny

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Re: WMT - Walmart Inc
« Reply #46 on: October 21, 2015, 06:26:39 AM »
Seems to me like Walmart has had the past ten years to get ready for a fight to the death with Amazon and has accomplished absolutely nothing.

I think it should take more than a single digit FCF yield to get excited about the business.

valueinvestor82

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Re: WMT - Walmart Inc
« Reply #47 on: October 21, 2015, 09:18:38 AM »
Johnny, and Amazon will win this battle how? Since Amazon has such amazing financial stats and FCF? It doesn't take a genius to sell products at a loss and deliver terrible results every quarter. Bezos' genius has been to be a good salesman to Wall Street. Walmart actually has a moat, sustainability, and attractive valuation. Call me a sadist but I can't wait to see amzn finally fall victim to reality.

Parsad

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Re: WMT - Walmart Inc
« Reply #48 on: October 21, 2015, 01:17:33 PM »
Walmart just needs to spin-off Sam's Club and sell off all other non-core assets.  If they focus solely on the big box stores, smaller city stores and their online business, they will be just fine.  Cheers! 
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johnny

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Re: WMT - Walmart Inc
« Reply #49 on: October 28, 2015, 06:27:06 PM »
Johnny, and Amazon will win this battle how? Since Amazon has such amazing financial stats and FCF? It doesn't take a genius to sell products at a loss and deliver terrible results every quarter. Bezos' genius has been to be a good salesman to Wall Street. Walmart actually has a moat, sustainability, and attractive valuation. Call me a sadist but I can't wait to see amzn finally fall victim to reality.

Maybe you think Bezos is an idiot, and Amazon is a scam, but that doesn't change the fact that they are throwing billions of dollars every year into a fulfillment infrastructure that Walmart will eventually be forced to compete with. Those fulfillment centers filled with tens of thousands of Kiva robots are sort of like oil rigs set up with dubious economics: 1. They are going to continue to exist no matter how bad of an investment they turned out to be, and 2. Marginal costs will determine market outcomes, not total cost.

When Amazon has (maybe stupidly) invested ten billion dollars in fulfillment centers, robots in those centers, cars running routes emanating from those centers, will they have a cost-advantage for marginal fulfillment? I think a common phenomenon offers a glimpse of the future: sometimes when people order something for 2-day shipping on Prime, they are surprised to receive the package a day early (or occasionally even same day). What does this mean? Amazon is doing so much business in certain areas that the cost-difference between same-day, 1-day, and 2-day delivery disappears. As sales volume increases in a given area, this phenomenon becomes more common.

Prime Now is an app that specifically filters down to inventory held in local fulfillment centers, offering a 2-hour delivery window (1 hour if you're willing to pay). This is all textbook scale advantage stuff. And if it has taken them billions in losses to get there, rather than being dismissive and condescending about it, you should be asking how and when Walmart plans to compete with that.

How have they competed so far? Well, it has been 10 years since Prime launched, and Walmart has just recently started pushing ShippingPass, which notably offers "3-day shipping" to members. It took them ten years to (soft)launch an offering that is 50% slower. What about that makes you feel confident about the future?
« Last Edit: October 28, 2015, 07:04:41 PM by johnny »