Analyzing ROE and EPS for Fortune 500 Companies
Return on equity (ROE) and earnings per share (EPS) are important metrics for measuring a company’s financial performance and health.
ROE measures the amount of profit a company generates from the shareholder’s investments. It is calculated by dividing the company’s net income by its average shareholder’s equity. A high ROE indicates that the company is effectively using its shareholder’s investments to generate profits.
On the other hand, EPS measures the amount of profit a company generates per share of its outstanding common stock. It is calculated by dividing the company’s net income by the total number of outstanding shares. A higher EPS indicates that the company is generating more profits per share of stock, which can be attractive to investors.
Now, let’s take a look at Walmart, Inc.’s ROE and EPS for the fiscal year 2022, based on the company’s latest annual report.
According to the report, Walmart’s ROE for the fiscal year 2022 was 18.1%. This is a slight increase from the previous year’s ROE of 17.6%. This indicates that Walmart is generating a decent return on the shareholder’s investments, and the company is effectively using its equity to generate profits.
Walmart’s EPS for the fiscal year 2022 was $5.68, which is a significant increase from the previous year’s EPS of $4.93. This indicates that the company is generating more profits per share of stock, which can be attractive to investors.
Overall, Walmart’s financial results suggest that the company is performing well and generating profits for its shareholders. However, it’s important to keep in mind that these metrics are just a small piece of the bigger picture, and it’s crucial to consider other factors, such as the company’s debt, cash flow, and overall industry trends, when evaluating a company’s financial health.
Reference
Walmart Inc. (2022). Walmart 2022 Annual Report. Retrieved from https://www.stock.walmart.com/investors/financial-information/annual-reports-and-proxies/default.aspx
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Question 
A public company’s value can be calculated by different approaches depending on the data available and is often shared through quarterly or annual reports or financial statements.
Analyzing ROE and EPS for Fortune 500 Companies
If you were a manager for the Fortune 500 company studied in our class, you might be asked to present how the company uses performance metrics in corporate valuation. Consider how you would present return on equity (ROE) and earnings per share (EPS) to a senior management group. Review and discuss the Fortune 500 companies’ ROE and EPS. What do these results say about the company?