Wal-Mart leads market cap despite loss
By Janice Chamberlain -- Kids Today, 6/1/2005 12:00:00 AM
High Point —
In April's edition of the scorecard, Kids Today looked at market capitalization of the publicly held vendors in the juvenile home furnishings industry. In this edition, Kids Today reviews the publicly traded retailers in the industry.
Not surprisingly, retailer market capitalization makes vendor market cap pale in comparison. From 2000 to 2004, vendor market cap gained nearly $3.7 billion, compared with $28.9 billion for the retailers. Just one company, retailer behemoth Wal-Mart, had a decline. Its market cap dropped nearly $15 billion. More than offsetting Wal-Mart's market cap decline were Target Corp., which added $17.5 billion in market cap; Sears, which added $9.3 billion; and J.C. Penney, which increased market cap by $9.1 billion.
Wal-Mart's decrease in market capitalization was caused by both a decrease in stock price,1.2%, and number of shares outstanding, 5.2%, since 2000.
Wal-Mart's overall market cap still dwarfed the competition, finishing the year at a whopping $222.3 billion. At a distant second was Target's $46.3 billion.
The largest percentage increase in market cap belonged to J.C. Penney, which improved market capitalization by 337.7%. Second-place honors went to Hanover Direct's 298% surge, with third place belonging to ShopKo, with a 284.8% jump in market cap.
Generally speaking, the market cap change over the four-year period mirrored the change in stock price. ShopKo matched its market cap growth with a 273.6% increase in stock price. Hanover Direct combined its 298% increase in market cap with a 278.9% jump in share price.
Analysts generally recommend that investors, both private and institutional, have a diversified market cap portfolio. Large-cap companies have a market cap of more than $15 billion; mid-cap have a market cap of between $2 billion and $15 billion and small-cap companies have a market cap between $300 million and $2 billion. Companies with market caps under $300 million are called "micro-cap" companies.
Generally speaking, companies with similar market capitalization tend to perform similarly. Market cap is one of many investment measurements that investors and analysts use. However, since one of the criterion used to determine market capitalization is stock price, which is based on investor perception, this year's market cap darling may be next year's dog.
Large market capitalization is not necessarily a predictor of company performance. Several years ago, the dot-coms had huge — and growing — market cap. When the bubble burst, a lot of analysts and investors were left with worthless, or near-worthless, stocks.
Wal-Mart is an example of a company with both large market cap and strong performance. The mega-retailer consistently posts strong sales, same-store sales and net profits.
A large-cap company usually finds it easier to obtain financing, either through commercial credit or by selling stock, than a micro-cap. All companies start off as micro-caps. Where they end up is a product of corporate strategy, company objectives and investor perception.
The juvenile home furnishings retail landscape is changing. ShopKo and Toys "R" Us have both agreed to be acquired and the March merger of Sears and Kmart into Sears Holding will no doubt cause a significant change in both the overall industry market capitalization and the individual worth of the two companies.
Market capitalization
Dollars and number of shares in millions
| change since 2000 | 2004 | Percentage change since 2000 | |||||
| Company | 2004 market capitalization | net change | % change | shares outstanding | stock price as of 12/31 | stock price | shares outstanding |
|
Source: Company reports and Kids Today market research.
|
|||||||
| Wal-Mart | $222,330.5 | ($14,983.4) | -6.3% | 4.2 | $52.50 | -1.2% | -5.2% |
| Target | 46,347.2 | 17,460.4 | 60.4 | 895.4 | 51.76 | 60.5 | 0.0 |
| Sears, Roebuck | 20,464.3 | 9,349.4 | 84.1 | 206.8 | 98.95 | 197.5 | -38.1 |
| Bed Bath & Beyond | 12,052.8 | 5,660.7 | 88.6 | 302.6 | 39.83 | 78.1 | 5.9 |
| J.C. Penney | 11,758.3 | 9,071.9 | 337.7 | 285.6 | 41.17 | 302.1 | 8.9 |
| Toys "R" Us | 4,776.4 | 1,482.5 | 45.0 | 215.1 | 22.21 | 33.1 | 9.0 |
| Linens 'n Things | 1,120.4 | 15.4 | 1.4 | 45.2 | 24.80 | -10.2 | 12.9 |
| Burlington Coat Factory | 991.6 | 154.1 | 18.4 | 44.6 | 22.21 | 17.6 | 0.7 |
| ShopKo Stores | 552.2 | 408.7 | 284.8 | 29.6 | 18.68 | 273.6 | 3.0 |
| Hanover Direct | 323.3 | 242.1 | 298.0 | 224.5 | 1.44 | 278.9 | 5.0 |
| TOTAL | $320,717.1 | $28,861.8 | 9.9% | ||||
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Wal-Mart leads market cap despite loss
Jun 30, 2005
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