Analytical Techniques on Company Historical Data
Wal-Mart Inc
Wal-Mart Inc is the most extensive American multinational retail cooperation. The company runs a chain of discount departments, hypermarkets and grocery stores in 27 countries with over 11,484 stores. It has over 2.2 million employees, which makes it the largest private employer globally. As of 2019, the company had a revenue of US$ 514.405 billion, making it the largest company in the world by revenue. The company has grown to become the largest grocery store in the United States. It is estimated that 65% of its total sales in 2019 came from operation in the United States, with foreign stores accounting for 35% of the total sales.
Wal-Mart was established in 1962 and became a publicly-traded company on the New York Stock Exchange in 1972. Initially, the company was limited to the lower Midwest and south, but the company had stores spread across the country by 1990. The company oversees investments have produced different results with successful operations in South and Central America, Canada, China, and the United Kingdom but failed ventures in South Korea and Germany(Jui, 2011).
Wal-Mart’s continued developments in the 2010s have seen the company double its fleet efficiency and improve its nutritional value. It launched a program in 2011 to gradually reduce the amount of sugar and salts and to eliminate Tran’s fat in its store brands. To help in its vision, the company chose to negotiate with its suppliers to respect its nutritional value and also subsidize the cost of vegetables and whole food. Besides, the company acquired several retail companies to help kill competition, including Moosejaw and Bonobos, to help expand its fashion wing.
The company has continued to record growth in revenue each year under the leadership of CEO Doug Macmillon. The company announced revenue of $514,405 billion and a profit of $129,109 billion in 2019 (Nickle, 2019). What makes the company’s future bright is its continuous expansion of the portfolio with the company now running chains of health centers which retail primary care services.
Graphical Representation of Data
Interpreting the Scatter plot
Figure 1.1 Scatter plot of the highest stock price of Wal-Mart Inc based on data from Yahoo Finance (2020)
Figure 1.1 shows Wal-Mart’s trends in the highest stock prices from June 2019 to June 2020. The graph is explaining the relationship between to variables i.e., on the Y-axis is the highest stock prices in US Dollars, which is the dependent variable while on the X-axis is time in days which is the independent variable. The scatter plot is linear. The highest stock prices decreased in value of the highest stock prices in July and August 2019, representing a negative relationship. The value of the highest stock price starts to increase between August and January of 2020, although there is no significant change, which represents a moderately strong relationship. After a sharp rise in the value of the highest stock price in March 2020, the stock prices experience a decrease in the end. There are no significant outliners that show the stability of Wal-Mart Inc.
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Figure 1.2 Scatter Plot of Wal-Mart’s lowest stock price based on data from Yahoo Finance (2020)
The above figure 1.2 depicts the trends of the lowest stock prices from June 2019 to June 2020 in Wal-Mart Inc. The graph shows the relationship between two variables i.e., on the Y-axis is the lowest stock prices in USD, the dependent variable, while on the X-axis is time in days, the independent variables. There was a negative relationship between June 2019 and August 2019, with a decrease in the value of the stock prices. The lowest stock prices stabilized between August 2019 and February 2020. There was a sharp rise in stock prices between February 2020 and April 2020, which is then followed by a progressive decline of value in the lowest stock prices. The scatter plot represents low volatility in the lowest stock prices due to its definite linear form. There is no significant outliner which shows that Wal-Mart’s stocks are stable.
Interpreting Histogram
Figure 2.1 Histogram of the adjusted closing stock prices of Wal-Mart Inc based on data from Yahoo Finance (2020)
Figure 2.1 is a graphical representation of the daily occurrence of the adjusted closing stock prices falling within equally distributed continuous data ranges. On the X-axis is the ranges of the adjusted closing stock price data, and on the Y-axis is the occurrence of prices falling within the ranges. The histogram is unbalanced to the middle, with the majority of data point falling within the US$116 and US$120 range. It indicates that the median is higher than the mean, which depicts high volatility in Wal-Mart’s stock.
Figure 2.2 Histogram of the stock volume of Wal-Mart based on data from Yahoo Finance (2020)
Figure 2.2 depicts the occurrence of Wal-Mart’s daily stock volume being traded within continuous data ranges. The X-axis represents the ranges of stock volume, while the Y-axis represents the number of occurrence. The histogram is unbalanced to the right, which indicates that the majority of stock traded falls within the lower volume. The histogram asl9 shows that the mean is higher than the median. The majority of the data fall to the right, which indicates an imbalance and speculative difficulties of the daily Wal-Mart stocks.
Descriptive Statistics
Mean, Median and Standard Deviation of Adjusted Closing Stock Prices
The mean of the adjusted closing stock prices for Wal-Mart is US$116.4528, which is an indication of a good market standing of the company’s stock. The mean depicts Wal-Mart’s continuous profitability and revenue growth. The median of the company’s adjusted closing stock prices is 116.6013, which represents the middle price of the data set. The median is higher than the mean, which shows there are several outliners on the lower side of the stock price. The presence of outliners depicts fluctuations in the prevalence of Wal-Mart’s stock prices. The standard deviation for Wal-Mart’s adjusted closing stock prices is US$5.371291, which indicates 4.612% stock price volatility. The volatility of the stock prices in the market is represented by the standard deviation, which in turn helps determine the risk attached to a stock. Wal-Mart stocks have a moderate risk prevalence of 4.612%.
Mean, Median and Standard Deviation of Daily Stock Volume
Wal-Mart Inc traded a daily average stock volume of 7,180,145 stocks between June 2019 and June 2020, which depicts low liquidity to the stocks. As the rule of thumb, an average stock volume of less than 20million indicates low liquidity (Kalodera & Schlag, 2004). Although Wal-Mart is a highly valuable publicly traded company, there is a low volume of shares traded owing to the Coronavirus pandemic, which has hit the economy hard. The median of the daily Stock Volume is 5,944,500 stocks, which is less than the mean. The lower median shows there are outlines on the higher side of the data set, which indicates some significant spikes in the daily stock volume. The standard deviation for the daily stock volume is 4,050,814.75 stocks, which is equivalent to 56.41% of the average daily stock volume. A deviation of 56.41% depicts the very high volatility of the data set, which shows that Wal-Mart’s stocks lack consistency.
Conclusion
The information given in the statistical and graphical representation provides the necessary information to the management, which will help them in expansion. There are several trends that the management should put into consideration, including; the stocks high and low prices remained stable throughout 2019 but experienced speedy rise and fall in 2020. The majority of the adjusted closing stock price data points fall within US$125 and US$130, indicating high demand. The standard deviation of the daily volume of traded stocks is 56.41%, which depicts very high volatility. It shows that Wal-Mart stocks are not consistent.
The management should be aware of these stock price trends to help them with the expansion of the company’s portfolio, acquisition of competitive online retail stores, and the opening of stores. There is a large number of data points falling between US$125 and USD$130, as indicated on the adjusted closing stock histogram. The volume traded may inspire the management to double the volume of stock by reducing the stock process by half. The strategy may also increase Wal-Mart’s stock demand hence improving its capitalization.
The scatter plot indicates the positive effect of the continued growth of Wal-Mart in revenue and profit. It also shows that the valuation of the stocks in June 2019 was right. In 2020, there is a gradual rise and gradual fall, which indicates the effect of the coronavirus pandemic on Wal-Mart’s operations. The median of the adjusted closing stock prices is higher on the range of data sets, which indicates high demand for the stock and decreases selling of the stock on the part of the current holders. There high demand for stocks coincides with a moment where online retail shops are some of the essential business in operation during the coronavirus pandemic.
References
Bose, N. (2018). Walmart partners with MGM to boost video-on-demand service Vudu. Reuters. Retrieved 22 June 2020, from https://www.reuters.com/article/us-walmart-partnership-mgm/walmart-partners-with-mgm-to-boost-video-on-demand-service-vudu-idUSKCN1MI089.
Jui, P. (2011). Walmart’s Downfall in Germany: A Case Study. J. Int. Manag (posted by 16 May 2011).
Kalodera, I., & Schlag, C. (2004). An Empirical Analysis of the Relation Between Option Market Liquidity and Stock Market Activity. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.493502
Nickle, A. (2019). Walmart reports highest annual growth rate in a decade. The Parker. Retrieved 22 June 2020, from https://www.thepacker.com/article/walmart-reports-highest-annual-growth-rate-decad.
Roberts, B., & Berg, N. (2012). Walmart: Key insights and practical lessons from the world’s largest retailer. Kogan Page Publishers.
Yahoo Finance. (2020). Wal-Mart Inc (WMT) [Data Set]. https://finance.yahoo.com/quote/WMT/history?period1=1561161600&period2=1592784000&interval=1d&filter=history&frequency=1d