About the companies
Wm Morrison Supermarkets PLC
William Morrison formed Wm Morrison Supermarkets in 1899. The company is based in the United Kingdom. It has engaged about 132,000 employees. As of 2012, the company’s revenue amounted to £18 billion and net income amounted to £949 million. The company is a component of the FTSE 100 Industry average.
Wal – Mart Stores Inc
Wal – Mart Stores Inc. is an American-based retail outlet. It was formed in 1962. The net profit of the company amounted to $193.406 billion in 2012 while the total revenue amounted to $446.950 billion. The company has engaged about 2.2 million employees worldwide. The company is a component of the Dow Jones Industry average.
Aim of the paper
The treatise carries out an analysis of shares of Morrison Supermarket and Wal – Mart. It reviews the prices of the shares and the financial position of the companies to assess the viability of investing in the share of the two companies.
The financial position of the companies
The table presented below shows a summary of the profitability, leverage, liquidity, and valuation ratios of the two companies.
|Ratio||Wm Morrison Supermarkets PLC||Wal – Mart Stores Inc.|
|3||Return on assets||5.80%||8.76%|
|4||Return on equity||12.18%||22.42%|
|2||Price / sales||36.95||0.55|
|3||Price / book||127.95||3.4|
|1||Total debt to equity||46.86||65.92|
The information presented in the table above shows that Wal – Mart Stores Inc. is more profitable than Morrison Supermarkets. The profitability ratios for Wal – Mart are higher than those of Morrison supermarkets by a small margin. Similarly, the earnings per share ratio for Wal – Mart is higher than that of Morrison supermarkets. The valuation ratios indicate that the shares for Morrison are highly valued than those of Wal – Mart.
This could be an indication that the investing in shares of Morrison Supermarket promises higher returns than those of Wal – Mart. The total debt to equity ratio shows that Wal – Mart is highly levered than Morrison Supermarket. The value of the current ratio for both companies was low and it shows that both companies have difficulties in offsetting current liabilities using current assets. The analysis above shows that both companies are in a sound financial position. Thus, they are suitable for investment since they have outstanding financial performance. Also, both companies have operated in the market for a long and have attained some level of financial stability in the market. Besides, there is evidence of financial growth since they were formed (Atrill 2009).
Share prices and dividends
The two companies paid dividends in the year 2012. The quarterly dividends paid by Wm Morrison Supermarket amounted to £3.49 while the quarterly dividend paid by Wal – Mart Stores Inc. amounted to $0.398.
There is minimal variation in the prices of shares of both companies. Also, there is an indication of growth in the share prices of the companies. This shows an increase in value of shares. If the trend continues, then it implies that investing in shares of both companies will be profitable in the long run.
Atrill, P 2009, Financial management for decision makers, Financial Times Prentice Hall, Harlow.