Walmart Inc (WMT) DCF Valuation: Is The Stock Undervalued?

Johnny HopkinsStock ScreenerLeave a Comment

As part of a new series, each week we typically conduct a DCF on one of the companies in our screens. This week we thought we’d take a look at one of the stocks that are not currently in our screens, Walmart Inc (WMT).


Walmart serves as the preeminent retailer in the United States, with its strategy predicated on superior operating efficiency and offering the lowest priced goods to consumers to drive robust store traffic and product turnover. Walmart augmented its low-price business strategy by offering a convenient one-stop shopping destination with the opening of its first supercenter in 1988.Today, Walmart operates over 4,700 stores in the United States (5,300 including Sam’s Club) and over 10,000 stores globally. Walmart generated over $420 billion in domestic namesake sales last year, with Sam’s Club contributing another $84 billion to the firm’s top line. Internationally, Walmart generated $100 billion in sales. The company serves around 240 million customers globally.

Recent Performance

Over the past twelve months the share price is up 22.11%.

WMT Chart

WMT data by YCharts


  • Discount Rate: 6%
  • Terminal Growth Rate: 2%
  • WACC: 6%

Forecasted Free Cash Flows (FCFs)

Year FCF (billions) PV(billions)
2024 18.8 17.74
2025 19.6 17.44
2026 20.5 17.21
2027 21.4 16.95
2028 22.4 16.74

Terminal Value

Terminal Value = FCF * (1 + g) / (r – g) = 571.20 billion

Present Value of Terminal Value

PV of Terminal Value = Terminal Value / (1 + WACC)^5 = 426.83 billion

Present Value of Free Cash Flows

Present Value of FCFs = ∑ (FCF / (1 + r)^n) = 86.08 billion

Enterprise Value

Enterprise Value = Present Value of FCFs + Present Value of Terminal Value = 512.92 billion

Net Debt

Net Debt = Total Debt – Total Cash =30.59 billion

Equity Value

Equity Value = Enterprise Value – Net Debt = 482.33 billion

Per-Share DCF Value

Per-Share DCF Value = Enterprise Value / Number of Shares Outstanding = $179.30


DCF Value Current Price Margin of Safety
$179.30 $162.54 9.35%

Based on the DCF valuation, the stock is currently undervalued. The DCF value of $179.30 per share is higher than the current market price of $162.54. The Margin of Safety is 9.35%.

It is important to note that this valuation is based on a number of assumptions, and these assumptions could change in the future. This valuation is meant to be a back-of-the-envelope analyse that could be used as a starting point in a much more thorough valuation process. As a result, it is important to do your own research before making any investment decision.

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