Potential For Margin Improvement At CBD Suggests Undervalued In Comparison To Walmex

The latest results from two of Latin America's largest retailers - Mexico-based Walmart de Mexico (Walmex) and Brazil based Companhia Brasileira de Distribuição (CBD) - highlight a wide disparity in the two firms' operating performance. Both have been growing rapidly and now generate similar levels of revenues (see first chart). However, Walmex does so much more profitably, generating almost four times as much net income as its Brazilian counterpart. This discrepancy is also reflected in their operating margins, with Walmex hovering around 8% over the last few years and CBD struggling to move much above 4%.

To read the full article, please choose one of the following options: