NEW YORK ( TheStreet) - Wal-Mart ( WMT) is the world's largest retailer, competing with companies like Target ( TGT), Costco ( COST), Amazon ( AMZN) and Best Buy ( BBY). The retailer sells almost every variety of merchandise, but is most dependent on grocery products.Our price estimate for Wal-Mart stands at $65.42 which is about 17% above market price. We estimate that Wal-Mart generates 62% of its stock value from its flagship U.S. stores. We recently examined the increasing competitive push in the grocery sector from retailers like CVS ( CVS), Walgreens ( WAG) and Target. Beyond these retail chains, Wal-Mart also competes with grocery stalwarts like Safeway ( SWY), Krogers ( KR) and Whole Foods ( WFMI). Wal-Mart has significant exposure to this segment with over 50% of its sales attributable to groceries. Apart from increasing competition, another cause of concern in the grocery sector is food inflation. Given Wal-Mart's high exposure to groceries, the retailer may need to seek cost cuts to mitigate the impact.
While the food inflation trend affects all grocery retailers, we highlight the impact on Wal-Mart's outlook below.