wal-mart wmt overvalued 3% buying index™ 4 value rating

Valuentum Retail Equity Research Ratings as of 9-May-2021 Data as of 7-May-2021

Buying Index™ 4 Value RatingEconomic Castle

Attractive

Investment ConsiderationsDCF ValuationRelative Valuation

Stock Chart (weekly) ValueCreation™ValueRisk™ValueTrend™Cash Flow GenerationFinancial LeverageGrowthTechnical EvaluationRelative StrengthMoney Flow Index (MFI)Upside/Downside Volume (U/D)Near-term Technical Support, 10-week MADCF = Discounted Cash Flow; MFI, U/D = Please see glossary. MA = Moving Average

Business Quality ValueCreation™

ValueRisk™ Very Poor Poor Good ExcellentCompany Vitals Investment HighlightsMarket Cap (USD) $399,149Avg Weekly Vol (30 wks) 37,72230-week Range (USD) 126.28 - 153.66Valuentum Sector Consumer Staples5-week Return 0.1%13-week Return -3.9%30-week Return -3.4%Dividend Yield % 1.6% Firms that generate economic profits with little operating variability score near the top right of the matrix.

Dividends per Share 2.20 Relative Valuation Forward P/E PEG Price / FV

Forward Dividend Payout Ratio 40.4% Anheuser-Busch InBev 27.2 0.5 101.7%Est. Normal Diluted EPS 7.40 Coca-Cola 24.8 3.1 133.0%P/E on Est. Normal Diluted EPS 19.0 Philip Morris 15.9 2.0 98.4%Est. Normal EBITDA 40,307 Procter & Gamble 23.9 2.9 130.8%Forward EV/EBITDA 13.0 Peer Median 24.3 2.4 116.2%EV/Est. Normal EBITDA 10.7 Wal-Mart 25.8 1.9 124.1%Forward Revenue Growth (5-yr) 2.0% Price / FV = Current Stock Price divided by Estimated Fair Value

Forward EPS Growth (5-yr) 16.0% Financial Summary ProjectedNMF = Not Meaningful; Est. = Estimated; FY = Fiscal Year

Fiscal Year End: Jan-20 Jan-21 Jan-22

Returns Summary 3-year Historical Average Revenue 523,964 559,151 547,409Return on Equity 15.9% Revenue, YoY% 1.9% 6.7% -2.1%Return on Assets 5.2% Operating Income 20,568 22,548 22,238ROIC, with goodwill 19.9% Operating Margin % 3.9% 4.0% 4.1%ROIC, without goodwill 26.3% Net Income 14,881 13,510 15,344ROIC = Return on Invested Capital; NMF = Not Meaningful Net Income Margin % 2.8% 2.4% 2.8%Leverage, Coverage, and Liquidity Diluted EPS 5.19 4.75 5.44In Millions of USD Diluted EPS, YoY % 129.1% -8.5% 14.7%Total Debt 48,871 Free Cash Flow (CFO-capex) 14,550 25,810 15,011Net Debt 31,130 Free Cash Flow Margin % 2.8% 4.6% 2.7%Total Debt/EBITDA 1.5 In Millions of USD (except for per share items)

Net Debt/EBITDA 0.9 MEGA-CEBITDA/Interest 14.6 NEUTRALCurrent Ratio 1.0Quick Ratio 0.3

• Over the past few years, Wal-Mart invested heavilyin its domestic omni-channel sales capabilities. Thecompany’s e-commerce performance continues toimpress. The recent launch of Wal-Mart+ is expectedto support its growth trajectory on this front.

NMF = Not Meaningful

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

Structure of the Food Retailers IndustryFirms in the mature food retailers industry generally have slim profit margins and face significant competition from brick-and-mortar locations (discount, department, drug, dollar, warehouse clubs and supermarkets) as well as Internet-based retailers (including Amazon). Though the industry is not terribly cyclical, economic conditions, disposable income, credit availability, fuel prices, and unemployment levels drive ticket size and traffic trends. Offering consumers a compelling value proposition is a must, even as higher-priced organic food offerings proliferate. We’re generally neutral on the group.

• Wal-Mart is a great free cash flow generator. InFebruary 2021, Wal-Mart sold off a majority stake inthe UK retailer Asda through a deal with an enterprisevalue of roughly £GBP6.8 billion. Wal-Mart retainedan economic interest in Asda.

• Headwinds from higher transportation and laborcosts are likely to persist in the near-term, though Wal-Mart’s pricing power has impressed of late, and its e-commerce businesses continue to scale nicely. Wal-Mart is focused on remodeling its stores andsupporting its digital initiatives as it works to keep itsmassive store base relevant and competitive.

----- Actual -----

• In 2018, Wal-Mart paid ~$16 billion for a 77% stakein Flipkart, an innovative e-commerce firm in India.Two years later, Wal-Mart sold Wal-Mart India toFlipkart, which enabled Flipkart to launch the FlipkartWholesale digital marketplace. Wal-Mart's operationsin India have a long growth runway.

Medium

High

Low 1• Wal-Mart operates retail stores. Its Wal-Mart USsegment includes the company's mass merchantconcept in the US. The firm recently launched its Wal-Mart+ membership program. Its Wal-MartInternational segment consists of the company'soperations outside of the US. The Sam's Club segmentincludes warehouse membership clubs andsamsclub.com.

Very High

BULLISHWEAK

NEUTRALBULLISH

138.00

The week with the highest trading volume out of the last 30 weeks was a week of heavy selling, or distribution (red bar).

EXCELLENTLOW

POSITIVEMEDIUM

LOWMODEST

Wal-Mart's e-commerce performance continues to impress though shares still look pricey here. The company sold off a majority stake in UK retailer Asda in February 2021.

OVERVALUEDNEUTRAL

Industry $113.00 $90.00 - $136.00 MEGA-CAP CORE Consumer Staples Recession Resistant

Visit us at www.valuentum.com

Wal-Mart WMT OVERVALUED 3% Estimated Fair Value Fair Value Range Investment Style Sector

107.00

117.00

127.00

137.00

147.00

157.00

0

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Valuentum Retail Equity Research (10=best) Data as of 7-May-2021


Attractive

Economic Profit Analysis

ValueCreation™ EXCELLENT Return on Invested Capital (ROIC)

ROIC - WACC Spread, 3-year historical average 17.4%ROIC - WACC Spread, 5-year projected average 18.6%These spreads equal the firm's annual average ROIC (excluding goodwill) less its WACC.

ValueTrend™ POSITIVE

Weighted Average Cost of Capital (WACC) The graph above shows the firm's ROIC (excluding goodwill) compared with historical averages and its WACC.

ROIC CalculationFiscal Year End: Jan-19 Jan-20 Jan-21

Earnings before InterestOperating Income after Depreciation 21,957 20,568 22,548- Adjusted Taxes (at 22% of EBIT) 4,831 4,525 4,961+ Amortization 0 0 0+ Non-cash Operating Items 10,100 -933 11,216- Minority Interest 509 320 196Earnings before Interest 26,717 14,790 28,607

Cost of Equity Invested CapitalRisk Free Rate Assumption Inventories 44,269 44,435 44,949Fundamental Beta (ERP multiplier) + Receivables 6,283 6,284 6,516Estimated Equity Risk Premium + Current Deferred Income Taxes 0 0 0Cost of Equity Assumption + Other Current Assets 3,623 1,622 20,861

+ Property, Plant and Equipment, Net 111,395 105,208 92,201After-tax Cost of Debt + Goodwill, Net (Cost in Excess) 31,181 31,073 28,983Risk Free Rate Assumption + Intangibles 0 0 0Synthetic Credit Spread + Non Current Deferred Income Taxes 0 0 0Cost of Debt Assumption - Accounts Payable 47,060 46,973 49,141Cash Tax Rate Assumption - Other Current Liabilities 22,587 24,369 39,674After-tax Cost of Debt Assumption

Invested Capital, with goodwill 127,104 117,280 104,695Cost of Preferred Stock Invested Capital, without goodwill 95,923 86,207 75,712Preferred DividendsValue of Preferred Stock Return on Invested Capital, with goodwill 21.9% 12.1% 25.8%Cost of Preferred Assumption Return on Invested Capital, without goodwill 27.4% 16.2% 35.3%

In Millions of USD

Weighted Average Cost of Capital (WACC)ERP = Equity Risk Premium

Note: Valuentum may provide an adjusted ROIC measure to better reflect the economic substance of a company's operations, as in the case of companies with negative invested capital.


22.0%4.3%

00

NA

8.9%

0.86.5%9.5%

4.3%1.18%

5.5%

Wal-Mart receives a ValueTrend™ rating of POSITIVE, which is based on thecompany's trailing three-year performance. The firm's ROIC (excluding goodwill)increased to 35.3% last year from its trailing 3-year average of 26.3%. We expect ROIC(excluding goodwill) to be in the ballpark of about 30% by the end of our discreteforecast period, with upside potential to about 39% over that time period.

---------- Actual ----------

4.3%

$113.00 $90.00 - $136.00 MEGA-CAP CORE Consumer Staples Recession Resistant

The best measure of a firm's ability to create value for shareholders is expressed bycomparing its return on invested capital (ROIC) with its weighted average cost ofcapital (WACC). The gap or difference between ROIC and WACC is called the firm'seconomic profit spread. Wal-Mart's 3-year historical return on invested capital (withoutgoodwill) is 26.3%, which is above the estimate of its cost of capital of 8.9%. As such,we assign the firm a ValueCreation™ rating of EXCELLENT. In the chart to the right,we show the probable path of ROIC in the years ahead based on the estimated volatilityof key drivers behind the measure. The solid grey line reflects the most likely outcome,in our opinion, and represents the scenario that results in our fair value estimate.

Wal-Mart WMT OVERVALUED 3% Estimated Fair Value Fair Value Range Investment Style Sector Industry

38.9%

30.4%

27.4%

16.2%

35.3%

21.9%

WACC, 8.9%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

89.1%

10.9%Equity

Debt

Preferred

Capital Structure



Attractive

Growth Analysis

Revenue Growth MODEST Projected Revenue (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year

Revenue3-year Historical

CAGR5-year Projected

CAGRWal-Mart USD 559,151 3.8% 2.0%

Anheuser-Busch InBev USD 52,329 4.8% 2.4%

Coca-Cola USD 33,014 -2.3% 6.7%

Philip Morris USD 28,694 -0.1% 5.3%

Procter & Gamble USD 70,950 2.9% 4.8%

Peer Median 1.4% 5.0%

Industry Median 3.3% 3.3%

In the chart above, we show our baseline forecast for revenue as well as potential upside and downside cases.

EBITDA Growth Projected EBITDA (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year

EBITDA3-year Historical

CAGR5-year Projected

CAGRWal-Mart USD 33,700 2.9% 8.0%


Coca-Cola USD 11,386 9.1% 9.7%

Philip Morris USD 12,649 0.7% 7.2%




In the chart above, we show our baseline forecast for EBITDA as well as potential upside and downside cases.

Net Income Growth Projected Net Income (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year Net Income

3-year Historical CAGR

5-year Projected CAGR

Wal-Mart USD 13,510 11.1% 14.8%


Coca-Cola USD 7,747 83.8% 8.6%





In the chart above, we show our baseline forecast for net income as well as potential upside and downside cases.

Wal-Mart's EBITDA expansion has trailed that of its peer group but has been greaterthan that of its industry group during the past three years. We expect the firm'sEBITDA expansion to outpace its peer group and industry group during the next fiveyears.Coca-Cola sports the highest expected EBITDA growth rate among peers.

Wal-Mart's net income expansion has trailed that of its peer group but has been greaterthan that of its industry group during the past three years. We expect the firm's netincome expansion to outpace its peer group and industry group during the next fiveyears. Wal-Mart sports the highest expected net income growth rate among peers.



Wal-Mart's revenue expansion has been greater than the median of both its peer groupand industry group during the past three years. We expect the firm's pace of revenuegrowth to fall below the median of both its peer group and industry group during thenext five years. Our growth assessment of each firm is based on the firm's 5-yearforward revenue CAGR. Wal-Mart's future pace of revenue growth is MODEST, in ouropinion.


514,405 523,964559,151

653,182

618,509583,836

0

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Attractive

Cash Flow and Financial Leverage AnalysisCash Flow Generation MEDIUM Financial Leverage LOW

The bars above show the firms operating cash flow, capital expenditures, and free cash flow, respectively. The bars above show the firm's annual debt-to-EBITDA. The red line shows the firm's normalized measure.

Cash Flow from Operations Projected Operating Cash Flow (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year CFO


5-year Projected CAGR

Wal-Mart USD 36,074 8.4% 1.8%


Coca-Cola USD 9,844 12.1% 8.6%





In the chart above, we show our baseline forecast for CFO as well as potential upside and downside cases.

Free Cash Flow (CFO-capital expenditures) Projected Free Cash Flow (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year FCF


5-year Projected CAGR Source: Company Filings, Valuentum Projections

Wal-Mart USD 25,810 12.2% -2.9%


Coca-Cola USD 8,667 17.7% 8.0%





In the chart above, we show our baseline forecast for free cash flow as well as potential upside and downside cases.

Wal-Mart's cash flow from operations expansion has trailed that of its peer group buthas been greater than that of its industry group during the past three years. We expectthe firm's pace of cash flow from operations growth to fall below that of both its peergroup and industry group during the next five years. Coca-Cola sports the highestexpected cash flow from operations growth rate among peers.

Wal-Mart's free cash flow expansion was less than that of its peer group but in line withthat of its industry group during the past three years. We expect the firm's pace of freecash flow growth to fall below that of both its peer group and industry group during thenext five years. Anheuser-Busch InBev sports the highest expected free cash flowgrowth rate among peers.



Firms that generate a free cash flow margin (free cash flow divided by total revenue)above 5% are usually considered cash cows. Wal-Mart's free cash flow margin hasaveraged about 3.6% during the past 3 years. As such, we think the firm's cash flowgeneration is relatively MEDIUM. The free cash flow measure shown above is derivedby taking cash flow from operations less capital expenditures and differs fromenterprise free cash flow (FCFF), which we use in deriving our fair value estimate forthe company. For more information on the differences between these two measures,please visit our website at Valuentum.com. At Wal-Mart, cash flow from operationsincreased about 30% from levels registered two years ago, while capital expendituresfell about 1% over the same time period.

Firms that exhibit high leverage tend to be more risky than firms with relatively lowdebt loads, all else equal. We measure financial leverage by taking a firm's currenttotal debt load and dividing it by the firm's trailing average 3-year annual EBITDA.Firms that are over 3 for this metric, we rate as having high leverage. Companies thathave less than 1.5 turns of leverage (or a measure below 1.5), we rate as having lowleverage. Wal-Mart's normalized debt-to-EBITDA measure of about 1.5 puts it in theLOW camp.


27,75325,255

36,074

10,344 10,705 10,264

17,40914,550

25,810

Jan-19 Jan-20 Jan-21

Cash from Operations Capital Expenditures Free Cash Flow

Wal-Mart -normalized

leverage, 1.50

0

0.5

1

1.5

2

2.5

3

3.5

1/31/2019 1/31/2020 1/31/2021

Wal-Mart- annual leverage Wal-Mart - normalized leverageMedium Threshold HighThreshold

27,75325,255

36,074

45,923

39,521

33,120

0

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14,550

25,81027,428

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Attractive

Valuation Analysis

Valuation Assumptions Valuation BreakdownIn Millions of USD (except for per share items)

Revenue CAGR %Avg. EBIT Margin %Avg. Cash Tax Rate %Earnings Before Interest CAGR %Earnings Per Share CAGR %Free Cash Flow to the Firm CAGR %Earnings before interest = Net operating profits less adjusted taxes

Phase II --> III FCFF CAGR % 3.3% (II) 3% (III)Cost of Equity %After-tax Cost of Debt %Discount Rate (WACC) %Synthetic credit spread = 1.18%

Phase I Present ValuePhase II Present ValuePhase III Present ValueTotal Firm Value

Net Balance Sheet Impact

Total Equity ValueDiluted Shares OutstandingFair Value per Share

DCF Valuation Summary Enterprise Free Cash FlowFiscal Year End: 1/31/2019 1/31/2020 1/31/2021

26,717 14,790 28,60710,678 10,987 11,15210,344 10,705 10,264

150 -163 -17,054 - Acquisitions 14,656 56 180

12,245 15,179 46,369In Millions of USD

Source: Company Filings, Valuentum Projections

Company NameValuentum Buying

Index™Forward Price-to-

Earnings

Price/Earnings-to-Growth (PEG), 5-

yearEV/Est. Normal

EBITDA

5-year Forward Earnings per Share CAGR

3-year Hist Avg ROIC, without

goodwillDividend Yield

%

Stock Price / Fair Value Estimate

Wal-Mart 4 25.8 1.9 10.7 16.0% 26.3% 1.6% 124.1%

Anheuser-Busch InBev 3 27.2 0.5 9.3 3.8% 22.5% 2.6% 101.7%

Coca-Cola 4 24.8 3.1 16.1 9.7% 41.8% 3.1% 133.0%

Philip Morris 5 15.9 2.0 10.7 9.4% 90.6% 4.9% 98.4%

Procter & Gamble 4 23.9 2.9 15.2 9.6% 32.5% 2.5% 130.8%

Peer Median 4.0 24.3 2.4 13.0 9.5% 37.2% 2.9% 116.2%

Industry Median 4.0 22.9 2.0 11.8 11.1% 24.0% 2.2% 110.9%

View back of report for a full list of industry constituents covered by Valuentum. VBI: Valuentum's ranking for the attractiveness of this investment at the date of the report.


20.4 16.9

17.4 14.8

17.5 13.5

14.4 12.7

21.5 18.0

13.6 12.1

Company Metrics versus Peer and Industry Medians

P/E on Est. Normal Diluted EPS Forward EV/EBITDA

19.0 13.0

In Millions of USD

---------- Actual ----------

We think Wal-Mart is worth $113 per share with a fair value range of $90.00 -$136.00. The margin of safety around our fair value estimate is driven by the firm'sLOW ValueRisk™ rating, which is derived from an evaluation of the historicalvolatility of key valuation drivers and a future assessment of them. Our near-termoperating forecasts, including revenue and earnings, do not differ much from consensusestimates or management guidance. Our model reflects a compound annual revenuegrowth rate of 2% during the next five years, a pace that is lower than the firm's 3-yearhistorical compound annual growth rate of 3.8%. Our model reflects a 5-year projectedaverage operating margin of 4.9%, which is above Wal-Mart's trailing 3-year average.Beyond year 5, we assume free cash flow will grow at an annual rate of 3.3% for thenext 15 years and 3% in perpetuity. For Wal-Mart, we use a 8.9% weighted averagecost of capital to discount future free cash flows.

Earnings before Interest+ Depreciation - Capital Expenditures - Change in Working Capital

Enterprise Free Cash Flow (FCFF)

Our future forecasts for key valuation drivers result in a future free enterprise cashflow stream. Above, we show how we calculate enterprise free cash flow and thehistorical performance of the metric for Wal-Mart. Over the next five years, weexpect the firm's enterprise free cash flow to expand at about a -12% compoundannual growth rate. During years 6 through 20, we expect the measure to grow at a3.3% rate. Beyond year 20 (in perpetuity), we grow the firm's free cash flow atinflation (3%).

-31,130

321,7972,847.0$113.00

156,733121,625352,927

8.9%Results74,569

0.3%16.0%-12.4%

Long-term Projections

9.5%4.3%


5-year Projections In the chart below, we show the build up to our estimate of total enterprise value forWal-Mart and the break down to the firm's total equity value, which we estimate tobe about 321.8USD billion. The present value of the enterprise free cash flowsgenerated during each phase of our model and the net balance sheet impact isdisplayed. We divide total equity value by diluted shares outstanding to arrive at our$113 per share fair value estimate.

2.0%4.9%

22.0%


74,569

156,733

121,625

31,130

321,797

0

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Yr 1-5 Yr 6-20 Perpetuity Net Balance SheetImpact

Equity Value



Attractive

Margin of Safety Analysis

Range of Potential Outcomes ValueRisk™ LOW

Revenue Volatility 4.5%Gross Margin Volatility 3.8%Earnings (EBI) Volatility 22.4%Cash Flow (FCFF) Volatility 33.7%Fair Value Range 20.0%The Fair Value Range sets the premium or discount on our estimate of the firm's fair value.

Upside and Downside ProbabilitiesProbability (fair value < $0) Less than 0.1%Probability (fair value > 2x current share price) 0.00%

Future Path of Fair Value

The graph above shows the expected future fair value of the firm's shares relative to its current stock price.

Our discounted cash flow process values each firm on the basis of the present value ofall future free cash flows. Although we estimate the firm's fair value at about $113 pershare, every company has a range of probable fair values that's created by theuncertainty of key valuation drivers (like future revenue or earnings, for example). After all, if the future were known with certainty, we wouldn't see much volatility in themarkets as stocks would trade precisely at their known fair values. Our ValueRisk™rating sets the margin of safety or the fair value range we assign to each stock. In thegraph above, we show this probable range of fair values for Wal-Mart. We think thefirm is attractive below $90 per share (the green line), but quite expensive above $136per share (the red line). The prices that fall along the yellow line, which includes ourfair value estimate, represent a reasonable valuation for the firm, in our opinion.

We strive to answer a few questions that investors often ask: 1) What are the chancesof a total loss of investment in this company? and 2) What is the chance that thecompany is really worth twice what I paid for it? The probability (fair value < 0)strives to answer the first question. It indicates the chance that the firm mayencounter insolvency based on the characteristics of its cash flow stream, capitalstructure, and risk profile. The probability (fair value > 2x current share price) strivesto answer the second question. It is our best estimate of whether investors areparticipating in a half-off sale by buying the company's shares at current prices.

We estimate Wal-Mart's fair value at this point in time to be about $113 per share. Astime passes, however, companies generate cash flow and pay out cash to shareholdersin the form of dividends. The chart to the right compares the firm's current share pricewith the path of Wal-Mart's expected equity value per share over the next three years,assuming our long-term projections prove accurate. The range between the resultingdownside fair value and upside fair value in Year 3 represents our best estimate of thevalue of the firm's shares three years hence. This range of potential outcomes is alsosubject to change over time, should our views on the firm's future cash flow potentialchange. The expected fair value of $142 per share in Year 3 represents our existing fairvalue per share of $113 increased at an annual rate of the firm's cost of equity less itsdividend yield. The upside and downside ranges are derived in the same way, but fromthe upper and lower bounds of our fair value estimate range.



Wal-Mart receives a ValueRisk™ rating of LOW based of the historical volatility ofkey drivers of economic value creation. The fair value range sets the margin of safetyaround our fair value estimate of the firm's shares.


$90

$113

$136

0 50 100 150 200 250

$171

$142

Current Share Price, $140

$113

$0

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Current Share Price Yr 1 Fair Value Yr 2 Fair Value Yr 3 Fair Value



Attractive

Technical Analysis

Technical Evaluation BULLISH Money Flow Index (MFI) NEUTRAL

30-week Price and Volume Chart (weekly)Relative Price Strength WEAK

5-week Company Performance 0.1%5-week Market Benchmark Performance 3.4%5-week Relative Performance vs. Market Benchmark -3.3%13-week Company Performance -3.9%13-week Market Benchmark Performance 7.2%13-week Relative Performance vs. Market Benchmark -11.1%30-week Company Performance -3.4%30-week Market Benchmark Performance 19.4%30-week Relative Performance vs. Market Benchmark -22.7%

Upside/Downside Volume BULLISH Timeliness Matrix™ Equity Valuation

Relative Strength

Firms that are undervalued and currently showing near-term pricing strength score near the top right of the matrix.


Weak 1Companies that are undervalued and showing near-term relative price strength couldrepresent timely buys, as the stock may be attractive to both value and momentuminvestors. A cross section of the firm's equity valuation and its relative share pricestrength is shown in the matrix above. We tend to prefer undervalued stocks that have strong pricing momentum, also called Valuentum stocks.

The level and trend of the Upside/Downside (U/D) volume ratio reveals whetherinstitutional participation has been bullish or bearish as of late. Wal-Mart's U/D volumeratio of 1.2 is not only greater than 1 but also is better than its trailing average,indicating BULLISH institutional interest during the past several weeks.

Strong

Neutral

The firm's near-term moving average (5-week, grey line) and medium-term movingaverage (13-week, red line) are shown in the chart above. Typically, when a shorter-term moving average crosses a medium- or longer-term moving average from below, itrepresents a bullish signal. If the short-term moving average crosses from above, tradersoften view this as bearish. Wal-Mart's 5-week moving average resides above its 13-week measure, indicating a BULLISH trend. Such a move could indicate a reversal inthe firm's 30-week downtrend.

The Money Flow Index (MFI) is an oscillator that uses price and volume to measurebuying and selling pressure. Chartists often look for overbought (above 80) andoversold (below 20) levels to warn of unsustainable near-term price extremes. Wal-Mart's MFI of 54 is neutral, suggesting the firm's stock is neither overbought noroversold at this time. However, a score over 50 tends to favor bulls. The MFI can alsobe used to gauge the strength or weakness of a firm's price trend. In Wal-Mart's case,its stock price and money flow neither reveals a bullish nor bearish divergence,further supporting our neutral view on its money flow action.

A firm's relative price strength can be assessed over any number of time horizons. Weshow the firm's performance over the past 5 weeks, 13 weeks, and 30 weeks below.In arriving at our relative strength rating for each company, we assess the past 13weeks, which includes the market's reaction to the firm's most recently reportedquarter, where applicable, and other more recent economic events. During the past 13weeks, Wal-Mart's shares returned -3.9%, while the market benchmark returned7.2%. We think Wal-Mart's 13-week relative price performance is WEAK.

In the chart above, we pinpoint the heaviest accumulation or distribution week of thefirm, determined by the week with the highest trading volume during the past 30 weeks.A heavy accumulation (buying) or distribution (selling) week often determines thefuture near-term direction of the firm's share price, as money managers continue tomove in or out of the stock in the days and weeks ahead driving the stock up or down,respectively. For Wal-Mart, the week with the highest trading volume out of the last 30weeks was a week of heavy selling, or distribution (red bar). Such market activity couldindicate a reversal of an uptrend or further confirmation of a downtrend.

Overvalued Fairly Valued Undervalued

Estimated Fair Value Fair Value Range Investment Style Sector Industry $113.00 $90.00 - $136.00 MEGA-CAP CORE Consumer Staples Recession Resistant

Wal-Mart WMT OVERVALUED 3%

107

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5-week Moving Average 13-week Moving

AverageStock Price

119124129134139144149154159

Overbought Line

Oversold Line

40

54

0102030405060708090

0.6

1.2

Average, 0.8

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

- 10-week Moving Average



Attractive

Pro Forma Income Statement -------------------- Historical --------------------

In Millions of USD (except for per share items)Jan-19 Jan-21

Total Revenue 514,405 559,151

Cost of Goods Sold 385,301 420,315

Selling, General and Administrative Expenses 107,147 116,288

Other Operating Expenses 0 0

Operating Income 21,957 22,548

Unusual items 0 0

Operating Income, including unusual items 21,957 22,548

Interest Expense (2,346) (2,315)

Other Non-operating Income (8,151) 331

Pre-tax Income 11,460 20,564

Income Taxes 4,281 6,858

Income after tax 7,179 13,706

Minority Interest and Equity Income (509) (196)

Net Income, excluding extra items 6,670 13,510

Income Available to Common, excluding extra items 6,670 13,510

Diluted Earnings per Share, excluding extra items 2.26 4.75

Diluted Weighted Shares Outstanding 2,945.0 2,847.0

Source: Company Filings, Xignite, Valuentum Projections

2,868.0 2,818.5 2,790.3


5.19 5.44 5.91

Note: Pro forma data in discounted cash-flow valuation may reflect significant adjustments from GAAP accounting data, including cash (not effective) tax rates and other analytical adjustments on a backward-looking and forward-looking basis. No individual data, by itself, found in this report should be used to make any investment decision.

14,881 15,344 16,487

14,881 15,344 16,487

(320) (196) (196)

15,201 15,540 16,683

4,915 4,383 4,705

20,116 19,923 21,388

2,147 0 0

(2,599) (2,315) (2,315)

0 0 0

20,568 22,238 23,703

20,568 22,238 23,703

0 0 0

394,605 411,360 423,934

108,791 113,811 117,289

523,964 547,409 564,926



---------- Projected ----------




Attractive

Pro Forma Balance Sheet -------------------- Historical --------------------


AssetsTotal Cash (including marketable securities) 7,722 17,741Inventory 44,269 44,949Accounts Receivable 6,283 6,516Other Current Assets 3,623 20,861Total Current Assets 61,897 90,067

Gross Fixed Assets 198,570 180,571(Accumulated Depreciation) (87,175) (88,370)Net Property, Plant, and Equipment 111,395 92,201

Goodwill, Net 31,181 28,983Intangibles, Net 0 0Other Long-term Assets 14,822 41,245Total Assets 219,295 252,496

LiabilitiesAccounts Payable 47,060 49,141Other Current Liabilities 22,587 39,674Current Portion of Long-term Debt 7,830 3,830Total Current Liabilities 77,477 92,645

Long-term Debt 50,203 45,041Other Long-term Liabilities 19,119 33,885Total Liabilities 146,799 171,571

Preferred Stock 0 0

Shareholders' EquityCommon Stock and Additional Paid in Capital 3,253 3,928Retained Earnings 80,785 89,763Other Equity (11,542) (11,766)Total Shareholders' Equity 72,496 81,925

Total Liabilities and Shareholders' Equity 219,295 253,496




236,495 260,616 271,140

(12,805) (11,257) (12,892)74,669 91,773 100,560

3,531 3,928 3,92883,943 99,102 109,523

0 0 0

161,826 168,844 170,581

48,021 45,041 45,04136,015 33,885 33,885

77,790 89,918 91,655

24,369 37,935 37,7786,448 3,830 3,830

46,973 48,153 50,047

236,495 260,616 271,140

0 0 038,408 41,245 41,245

105,208 95,345 98,842

31,073 28,983 28,983

195,028 194,633 209,397(89,820) (99,288) (110,555)

1,622 20,861 20,86161,806 95,044 102,070

44,435 44,238 45,8436,284 6,386 6,597

9,465 23,559 28,769

---------- Projected ----------


Estimated Fair Value Fair Value Range Investment Style Sector Industry $113.00 $90.00 - $136.00 MEGA-CAP CORE Consumer Staples Recession Resistant

Wal-Mart WMT OVERVALUED 3%



Attractive

Pro Forma Cash Flow Statement -------------------- Historical --------------------


Cash from OperationsNet Income 7,179 13,706Depreciation and Amortization 10,678 11,152Deferred Income Taxes (499) 0Operating Gains Or Losses 10,100 11,216Changes in Working Capital 295 0

Cash Flow from Operations 27,753 36,074

Cash from InvestingPurchase of Property, Plant, Equipment (10,344) (10,264)Other Investing Cash Flows (13,692) 193Cash Flow from Investing (24,036) (10,071)

Cash from FinancingIssuance (Retirement) of Stock (7,410) (2,625)Issuance (Retirement) of Debt 12,035 (5,706)Dividends Paid (6,533) (6,550)Other Financing Cash Flows (629) (1,236)Cash Flow from Financing (2,537) (16,117)

Foreign Exchange (438) 235

Net Change in Cash 742 10,121




(69) 0 0

1,759 4,818 5,210

(14,299) (10,192) (10,213)

(6,603) (6,201) (6,262)(908) 0 0

(5,717) (3,991) (3,952)(1,071) 0 0

(9,128) (14,062) (14,765)

(10,705) (14,062) (14,765)1,577 0 0

25,255 29,072 30,188

(933) 4,500 2,3180 (1,885) (80)

10,987 10,918 11,2670 0 0

15,201 15,540 16,683



---------- Projected ----------




Attractive

Recession ResistantRecession Resistant FAIRLY VALUED

Company Name TickerMarket Cap (USD-

mil) DCF Valuation ValueCreation™ ValueRisk™ ValueTrend™ Technicals Relative Strength

Altria Group MO 89,245 FAIRLY VALUED EXCELLENT LOW POSITIVE VERY BEARISH STRONG

Anheuser-Busch InBev BUD 111,227 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE BEARISH WEAK

Archer-Daniels-Midland ADM 28,007 FAIRLY VALUED GOOD MEDIUM NEGATIVE BULLISH NEUTRAL

Campbell Soup CPB 14,858 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE VERY BULLISH WEAK

Casey's General CASY 6,518 FAIRLY VALUED GOOD MEDIUM NEGATIVE BEARISH WEAK

Church & Dwight CHD 22,016 FAIRLY VALUED EXCELLENT LOW POSITIVE BEARISH WEAK

Clorox CLX 28,029 FAIRLY VALUED EXCELLENT LOW POSITIVE VERY BULLISH WEAK

Coca-Cola KO 235,647 OVERVALUED EXCELLENT MEDIUM NEGATIVE BULLISH NEUTRAL

Colgate-Palmolive CL 68,940 OVERVALUED EXCELLENT LOW NEGATIVE BULLISH WEAK

Costco COST 166,893 OVERVALUED EXCELLENT LOW NEGATIVE BULLISH STRONG

Fresh Del Monte FDP 1,200 FAIRLY VALUED POOR LOW NEGATIVE VERY BULLISH WEAK

General Mills GIS 38,344 FAIRLY VALUED EXCELLENT LOW POSITIVE VERY BULLISH WEAK

Hormel Foods HRL 27,538 FAIRLY VALUED EXCELLENT LOW NEGATIVE VERY BULLISH WEAK

Kellogg K 23,060 OVERVALUED EXCELLENT LOW NEGATIVE VERY BULLISH WEAK

Keurig Dr Pepper KDP 41,686 FAIRLY VALUED EXCELLENT LOW NEGATIVE VERY BULLISH WEAK

Kimberly-Clark KMB 53,485 OVERVALUED EXCELLENT LOW NEGATIVE VERY BULLISH WEAK

Kraft Heinz KHC 39,358 FAIRLY VALUED POOR MEDIUM POSITIVE BEARISH WEAK

Kroger KR 27,410 FAIRLY VALUED GOOD MEDIUM NEGATIVE BEARISH WEAK

Lancaster Colony LANC 4,717 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE BEARISH WEAK

McCormick MKC 24,613 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BEARISH WEAK

Molson Coors TAP 7,703 FAIRLY VALUED POOR LOW NEGATIVE BEARISH WEAK

Mondelez Intl MDLZ 85,023 FAIRLY VALUED EXCELLENT LOW POSITIVE BULLISH WEAK

PepsiCo PEP 197,761 FAIRLY VALUED EXCELLENT LOW POSITIVE BULLISH WEAK

Philip Morris PM 151,765 FAIRLY VALUED EXCELLENT LOW POSITIVE NEUTRAL STRONG

Procter & Gamble PG 360,588 OVERVALUED EXCELLENT LOW POSITIVE BULLISH NEUTRAL

Smucker SJM 13,570 FAIRLY VALUED GOOD LOW NEGATIVE BULLISH NEUTRAL

Sysco SYY 37,883 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE BULLISH STRONG

Target TGT 108,514 FAIRLY VALUED EXCELLENT LOW POSITIVE BULLISH STRONG

Tyson Foods TSN 22,150 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE BEARISH WEAK

Wal-Mart WMT 399,149 OVERVALUED EXCELLENT LOW POSITIVE BULLISH WEAK


LARGE-CAP CORE ATTRACTIVE

MEGA-CAP CORE NEUTRAL

LARGE-CAP CORE NEUTRAL

LARGE-CAP VALUE UNATTRACTIVE



LARGE-CAP VALUE ATTRACTIVE


LARGE-CAP CORE UNATTRACTIVE

MID-CAP VALUE ATTRACTIVE




MID-CAP CORE UNATTRACTIVE




SMALL-CAP CORE ATTRACTIVE






MID-CAP VALUE ATTRACTIVE




LARGE-CAP VALUE ATTRACTIVE


The above bar chart reveals the price/fair value of the company, its peers, and the industry as a whole.Shaded blue denotes that the firm has earned the highest rating for that respective category.Investment Style Relative Valuation



We think the Recession Resistant industry is fairly valued at this time. The industry'smarket cap is trading between 80% and 120% of our estimate of its fair value based onour DCF process. Although we use a firm-specific ValueRisk™ measure to determinewhether a firm is undervalued or overvalued based on our DCF process, we consider anindustry to be undervalued if it is trading below 80% of our estimate of its fair valueand overvalued if it is trading at over 120% of our estimate of its fair value. We thinkthese fair value ranges are appropriate given the diversification benefits of holding abasket of stocks. Although there may be individual opportunities within the RecessionResistant industry, we don't find the industry as a whole attractive based solely onvaluation.


124.1%

116.2%

110.9%

100%

105%

110%

115%

120%

125%

130%

Wal-Mart Peer Median Recession Resistant

Valuentum's Full Page Stock Report


BA

G

I

N

C

J

D

M

H

E

L

K

A DCF ValuationShows whether the firm is undervalued, fairly valued, or overvalued based on our DCF process and by how much.

B Valuentum Buying Index (VBI)Provides insight into the timeliness of an investment opportunity. We rank firms from 1 to 10 based on rigorous fiancial, valuation, and technical analysis. A 10 represents one of our top picks.

C Valuentum Value Rating (VVR) Indicates whether we think a firm is undervalued, fairly valued, or overvalued on the basis of our DCF process.

D Investment ConsiderationsEvaluates firms on 12 different measures, from the firm's growth and cash flow generation to the stock's money flow index and upside/downside volume. We reveal technical support and resistance levels.

E 30-week Price and Volume ActionDisplays the last accumulation or distribution week of the stock and historical price and volume action.

G Company VitalsShows sector,industry and other relevant company information.

H Business QualitySummary of the firm's ability to create value for shareholders compared wth the underlying risk of its operations.

I Normalized EPS and EBITDAEstimation of the firm's normalized earnings measures and the corresponding valuation mutliples.

J Investment HighlightsOur opinion of the company, including analysis of its financial and technical strengths and weaknesses.

K Relative ValuationComparison of the firm's PE, PEG, and Price/FV ratios versus peers.

L Returns Summary3-year averages of the firm's key return measures, including return on invested capital, with and without goodwill.

M Leverage, Coverage, and LiquidityA snapshot of the company's financial health.

N Financial SummaryA summary of the proforma financial statements found in the extended report.

VBI Score Action10 Top Pick9 We'd Consider Buying

6 to 8 Constructive (add/trim)3 to 6 Less Exciting (add/trim)1 to 2 We'd Consider Selling

UNDERVALUED

FAIRLY VALUED

OVERVALUED

• Revenue Volatility • Margin Volatility • Earnings Volatility • Cash Flow VolatilityThe information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

Historical firm-specific financial data generates our ValueCreation™, ValueRisk™, and ValueTrend™ ratings. The data provides the basis for our financial forecasts. Full annual forecasts of income statement, balance sheet, and cash flow statement items. Firm-specific cost of equity, cost of debt, weighted average cost of capital, and long-term growth and profitability measures estimated.

A complete three-stage free cash flow to the firm valuation model generates an estimate of the firm's equity value per share based on estimated future free cash flows.The volatility of key valuation drivers are estimated and a margin of safety is determined.

The firm's stock price is compared to the suggested margin of safety. If a firm's stock price falls below the lower bound of our estimated fair value range, it receives Valuentum's highest Value Rating.

About Valuentum

@Valuentum, we strive to stand out from the crowd. Mostinvestment research publishers fall into a few camps,whether it be value, growth, income, momentum, chartistor some variant of the aforementioned. We think each inits own right holds merit, but we think the combination ofthese approaches can be even more powerful. After all,stock price movements aren’t just driven by investors ofthe value or growth variety, but by all market participants.Therefore, we look at stocks from a variety of investmentperspectives in order to better understand and identifyideas. We want to provide relevant information.

The core of our process is grounded in rigorous discountedcash flow analysis and incorporates the concept of amargin of safety. We offer a fair value estimate for eachcompany and provide a relative valuation assessment inthe context of a company’s industry and closest peers. Across section of our ValueCreation™ and ValueRisk™ratings provides a financial assessment of a company’sbusiness quality, while our ValueTrend™ rating offersinsight into the trajectory of a firm’s economic profitcreation. The Economic Castle rating measures themagnitude of future economic value generation, and theDividend Cushion ratio assesses the financial capacity of acompany to keep raising its dividend.

Our analysis doesn’t stop there. We also offer a technicalevaluation of the stock as well as other momentumindicators. We not only want to reveal to readers whichfirms may be undervalued, in our view, but we also wantto provide readers with information to help them assessentry and exit points. Most research publishers focus onarriving at a target price or fair value estimate, but mayfall short of providing a technical assessment to bolsterbuy and sell disciplines. We strive to go the distance andprovide readers with answers--not half the story.

An explanation of our approach would not be complete ifwe didn’t describe our ideal stock idea. We’re lookingfor companies that are undervalued--both on a DCF basisand versus peers--have strong growth potential, have asolid track record of creating economic profits forshareholders with reasonable risk, are strong cash flowgenerators, have manageable financial leverage, and arecurrently showing bullish technical and momentumindicators. For dividend growth ideas, we look forcompanies that have both the capacity and willingness tokeep raising the dividend.

Can such stock ideas exist? Subscribe to Valuentum toreceive our best investment ideas and analysis onhundreds of stocks, dividends, ETFs and more.

Financial Forecasts

Financial Statement Analysis

Discounted Cash Flow Valuation

ModelValueRisk™

Rating

Valuentum Value Rating (VVR)

VBI Score Action10 Top Pick9 We'd Consider Buying

6 to 8 Constructive (add/trim)3 to 6 Less Exciting (add/trim)1 to 2 We'd Consider Selling

Methodology for Picking Stocks - Valuentum Buying Index™ (VBI)

@ Valuentum, we like to look at companies from anumber of different perspectives. The Valuentum BuyingIndex (VBI) combines rigorous financial and valuationanalysis with an evaluation of a stock's technicals to derivea rating between 1 and 10 for each company. The VBIplaces considerable emphasis on a company's discountedcash-flow (DCF) valuation, its relative valuation versuspeers (both forward PE and PEG ratios), and its technicalsin order to help readers assess entry and exit points on themost interesting ideas.

Let's follow the red line on the flow chart below to seehow a company can score a 10, the best mark on the index(a "Top Pick"). First, the company would need to be'undervalued' on a DCF basis and 'attractive' on a relativevalue basis. The stock would also have to be exhibiting

'bullish' technicals. The firm would need aValueCreation™ rating of 'good' or 'excellent', exhibit'high' or 'aggressive' growth prospects, and generate atleast a 'medium' or 'neutral' assessment for cash flowgeneration, financial leverage, and relative price strength.

This is a tall order for any company. Stocks that don'tmake the cut for a 10 are ranked accordingly, with theleast attractive stocks, in our opinion, garnering a ratingof 1 ("We'd sell"). Most of our coverage universeregisters ratings between 3 and 7, but at any given timethere could be large number of companies garneringeither very high or very low scores, especially at marketlows or tops, respectively.

The Best Ideas Newsletter portfolio puts the VBI intopractice.

The information contained in this report is not represented or warranted to be accurate, correct, complete, or timely. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

DCF FairlyValued

DCF Undervalued

Relative ValueUnattractive/Neutral

Relative Value Attractive

Relative ValueUnattractive/Neutral


Technicals Bearish: 1

Technicals Neutral: 2

TechnicalsBullish: 4

Technicals Bullish: 7

TechnicalsBearish: 6

Technicals >= BullishValueCreation(TM) >= GoodGrowth >= HighCash Flow Generation >= MediumFinancial Leverage <= MediumRelative Strength >= Neutral

Final Score: 10



TechnicalsBearish: 3

Relative Value Unattractive/Neutral











Initial Index Score

DCF Overvalued

ValueRisk™. This is a proprietary Valuentum measure. ValueRisk™ indicates thehistorical volatility of key valuation drivers, including revenue, gross margin, earningsbefore interest, and enterprise free cash flow. The standard deviation of each measure iscalculated and scaled against last year's measure to arrive at a percentage deviation foreach item. These percentage deviations are weighted equally to arrive at thecorresponding fair value range for each stock, measured in percentage terms. The firm'sperformance is measured along the scale of LOW, MEDIUM, HIGH, and VERY HIGH.The ValueRisk™ rating for each firm also determines the fundamental beta of eachfirm along the following scale: LOW (0.85), MEDIUM (1), HIGH (1.15), VERY HIGH(1.3).

Range of Potential Outcomes. The firm's margin of safety is shown in the graphicof a normal distribution. We consider a firm to be undervalued if its stock price fallsalong the green line and overvalued if the stock price falls along the red line. Weconsider the firm to be fairly valued if its stock price falls along the yellow line.

Return on Invested Capital. At Valuentum, we place considerable emphasis onreturn on invested capital (both with and without goodwill). The measure focuses onthe return (earnings) the company is generating on its operating assets and is superiorto return on equity and return on assets, which can be skewed by a firm's leverage orexcess cash balance, respectively. ValueTrend™. This is a proprietary Valuentum measure. ValueTrend™ indicates the

trajectory of the firm's return on invested capital (ROIC). Firms that earned an ROIClast year that was greater than the 3-year average of the measure earn a POSITIVErating. Firms that earned an ROIC last year that was less than the 3-year average of themeasure earn a NEGATIVE rating.

Technical Evaluation. We evaluate a firm's near-term and medium-term movingaverages and money flow index (MFI) to assign each firm a rating along thefollowing scale: VERY BULLISH, BULLISH, NEUTRAL, BEARISH, and VERYBEARISH.

Cash Flow Generation. Firms' cash flow generation capacity are measured along thescale of STRONG, MEDIUM, and WEAK. A firm with a 3-year historical free cashflow margin (free cash flow divided by sales) greater than 5% receives a STRONGrating, while firms earning less than 1% of sales as free cash flow receive a WEAKrating.

Stock Price Relative Strength. We assess the perfomance of the company's stockduring the past quarter, 13 weeks, relative to an ETF that mirrors the aggregateperformance of constituents of the stock market. Firms are measured along the scaleof STRONG, NEUTRAL, and WEAK. Companies that have outperformed themarket index by more than 2.5% during this 13-week period receive a STRONGrating, while firms that trailed the market index by more than 2.5% during this 13-week period receive a WEAK rating.

Financial Leverage. Based on the firm's normalized debt-to-EBITDA metric, we rank firms on the following scale: LOW, MEDIUM, and HIGH. Companies with a normalized debt-to-EBITDA ratio below 1.5 receive a LOW score, while those with a measure above 3 receive a HIGH score.

Money Flow Index (MFI). The MFI is a technical indicator that measures buyingand selling pressure based on both price and volume. Traders typically use thismeasure to identify potential reversals with overbought and oversold levels. We use a14-week measure to rank firms along the following scale: EXTREMELYOVERBOUGHT (>90), OVERBOUGHT (80-90), NEUTRAL (20-80), OVERSOLD(10-20), EXTREMELY OVERSOLD (0-10).

Upside/Downside Volume. Heavy volume on up days and lower volume on down days suggests that institutions are heavily participating in a stock's upward advance. We use the trailing 14-week average of upside and downside volume to calculate an informative ratio. We rank each firm's U/D volume ratio along the following scale: BULLISH, IMPROVING, DETERIORATING, and BEARISH.

Fair Value Range. The fair value range represents an upper bound and lower bound,between which we would consider the firm to be fairly valued. The range considers ourestimate of the firm's fair value and the margin of safety suggested by the volatility ofkey valuation drivers, including revenue, gross margin, earnings before interest, andenterprise free cash flow (the determinants behind our ValueRisk™ rating).

DCF Valuation. We opine on the firm's valuation based on our DCF process. Firmsthat are trading with an appropriate discount to our fair value estimate receive anUNDERVALUED rating. Firms that are trading within our fair value range receive aFAIRLY VALUED rating, while firms that are trading above the upper bound of ourfair value range receive an OVERVALUED rating.

Company Vitals. In this section, we list key financial information and the sector andindustry that Valuentum assigns to the stock. The P/E-Growth (5-yr), or PEG ratio,divides the current share price by last year's earnings (EPS) and then divides thatquotient by our estimate of the firm's 5-year EPS growth rate. The estimatednormalized diluted EPS and estimated normalized EBITDA represent the five-yearforward average of these measures used in our discounted cash flow model. The P/Eon estimated normalized EPS divides the current share price by estimated normalizeddiluted EPS. The EV/estimated normalized EBITDA considers the current enterprisevalue of the company and divides it by estimated normalized EBITDA. EV is definedas the firm's market capitalization plus total debt, minority interest, preferred stockless cash and cash equivalents.

Relative Value. We compare the firm's forward price-to earnings (PE) ratio and itsprice/earnings-to-growth (PEG) ratio to that of its peers. If both measures fall below thepeer median, the firm receives an ATTRACTIVE rating. If both are above the peermedian, the firm receives an UNATTRACTIVE rating. Any other combination resultsin a NEUTRAL rating.

ValueCreation™. This is a proprietary Valuentum measure. ValueCreation™indicates the firm's historical track record in creating economic value for shareholders,taking the average difference between ROIC (without goodwill) and the firm'sestimated WACC during the past three years. The firm's performance is measured alongthe scale of EXCELLENT, GOOD, POOR, and VERY POOR. Those firms withEXCELLENT ratings have a demonstrated track record of creating economic value,while those that register a VERY POOR mark have been destroying economic value.

Business Quality Matrix. We compare the firm's ValueCreation™ and ValueRisk™ratings. The box is an easy way for investors to quickly assess the business quality ofa company. Firms that generate economic profits with little operating variabilityscore near the top right of the matrix.

Timeliness Matrix. We compare the company's recent stock performance relative tothe market benchmark with our assessment of its valuation. Firms that areexperiencing near-term stock price outperformance and are undervalued by ourestimate may represent timely buys.

The information contained in this report is not represented or warranted to be accurate, correct, complete, or timely. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

GlossaryEstimated Fair Value. This measure is our opinion of the fair equity value per share ofthe company. If our forecasts prove accurate, which may not always be the case, wemay expect a firm's stock price to converge to this value within the next 3 years.

Investment Style. Valuentum uses its own proprietary stock-classification system.Nano-cap: Less than $50 million; Micro-cap: Between $50 million and $200 million;Small-cap: Between $200 million and $2 billion; Mid-cap: Between $2 billion and$10 billion; Large-cap: Between $10 billion and $200 billion; Mega-cap: Over $200billion. Blend: Firm's that we think are undervalued and exhibit high growthprospects (growth in excess of three times the rate of assumed inflation). Value:Firm's that we believe are undervalued, but do not exhibit high growth prospects.Growth: Firms that are not undervalued, in our opinion, but exhibit high growthprospects. Core: Firms that are neither undervalued nor exhibit high growthprospects.

WMT Rating History Price Fair Value VBI7-May-21 $140.20 $113.00 415-Oct-20 $144.52 $111.00 419-Feb-20 $118.10 $109.00 631-Dec-19 $118.42 $109.00 321-Aug-19 $112.06 $99.00 629-Apr-19 $101.56 $100.00 68-Apr-19 $100.80 $100.00 63-Dec-18 $93.19 $94.00 316-Aug-18 $98.64 $94.00 620-Jul-18 $88.06 $88.00 616-Mar-18 $89.17 $88.00 316-Nov-17 $99.62 $88.00 64-Aug-17 $80.48 $71.00 617-Mar-17 $69.89 $65.00 6

Disclosures, Disclaimers & Additional SourcesTo send us feedback or if you have any questions, please contact us at [email protected]. We're always looking for ways to better serve your investment needs and improve our research.

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wal-mart wmt overvalued 3% buying index™ 4 value rating

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