Tuesday, February 15, 2011

Wal-Mart Could Get Wounded In Grocery Wars

OAKLAND, CA - JANUARY 08:  Wal-Mart customers ...Image by Getty Images via @daylife
Wal-Mart is the largest retailer in the world based on revenues and competes with other retailers like Costco, Target and Amazon. Our price estimate for Wal-Mart’s stock stands at$65.42 which is about 19% above market price. We estimate that U.S. Wal-Mart stores constitute a little over 60% of the company’s value, while another 32% comes from international Wal-Mart stores.

A significant portion of Wal-Mart’s sales come from groceries, an area expected to see increasing competition going forward. Should the retail giant be concerned by this trend? According to one analyst, Wal-Mart commands about 33% share of the grocery market. The chart below depicts the proportion of Wal-Mart’s sales broken down by product category.

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