Walmart biggest, but room to grow if profit is measurement of best

Walmart again topped the Fortune 500 list of America’s largest companies, and it doesn’t appear likely to relinquish the top ranking anytime soon. With annual revenues of $421.8 billion, Walmart easily outpaced such oil companies as ExxonMobil at $354.6 billion, Chevron at $196.3 billion and ConocoPhillips at $184.9 billion. Higher oil prices last year boosted the top line at those companies, but even the closest contender of the lot would need oil prices to increase dramatically from current levels for any shot at overtaking Walmart. And that assumes Walmart doesn’t continue growing, which isn’t likely to happen given the potential for further expansion overseas.

Of course, being the biggest isn’t always the best as Walmart has learned the hard way. Being the biggest results in increased scrutiny and elevated expectations across all aspect of the operation because the assumption is big revenues equal big profits.

Of course, that isn’t the case because we’re talking retail and notoriously slim margins, which leaves Walmart with a profit of about $16.4 billion. That’s a big number to be sure, but if Walmart had achieved the same rate of profitability as ExxonMobil last year it would have generated profits of $36.2 billion on revenues of $421.8 billion.

To take this exercise a step further, imagine if Walmart had achieved a rate of profitability comparable with that of AT&T, which produced profits of $19.8 billion on revenues of $124.6 billion or Procter & Gamble, which produce profits of $12.7 billion on revenues of $79.6 billion. If Walmart matched their rate of profitability it would have dropped a staggering $67.2 billion to the bottom line, a figure that would send shareholders cheering and critics jeering even louder than they do now.