Walmart Inc. (WMT) Stock Analysis



Walmart Inc. is a global retail giant that operates a chain of supermarkets, discount department stores, and grocery stores. Established in 1945 and headquartered in Bentonville, Arkansas, Walmart has expanded far beyond its origins to become a worldwide entity known for its commitment to offering low prices and a wide range of products.


The company is divided into three main segments: Walmart U.S., Walmart International, and Sam’s Club. It’s a retail powerhouse that includes supercenters, supermarkets, hypermarkets, warehouse clubs, cash-and-carry stores, and discount stores, operating under various brands including the flagship Walmart, as well as Walmart Neighborhood Market and Sam’s Club.


A hallmark of Walmart’s approach is the operation of a sizable e-commerce platform, which includes a range of websites and mobile commerce applications. The company also maintains a robust private brand portfolio with names like Equate, Mainstays, and Great Value among others.


On the financial side, Walmart’s strategy has allowed it to continue expanding and maintaining a strong market presence, with a clear focus on maximizing efficiency and keeping prices competitive for consumers. Its large scale and dominance in the retail space are a testament to its successful blend of in-store and digital retail strategies.


 Walmart Inc. (WMT) Stock Analysis

Walmart Inc. (WMT), the retail behemoth known for its superstores, hypermarkets, and discount department stores, holds a significant place in the global retail landscape. With a market capitalization of $490.49 billion as of the trailing twelve months (ttm), it continues to show its prowess in the retail sector.

Walmart’s revenue growth over the years reflects a consistent upward trajectory, a testament to its expansive reach and operational efficiency. The reported revenue of $648.13 billion and a net income of $15.51 billion in the ttm indicate a robust profit-making ability despite the tight margins typical in the retail industry. The earnings per share (EPS) of $1.91, coupled with a price-to-earnings (PE) ratio of 31.87, suggest that investors are willing to pay a premium for Walmart’s stock, which is likely due to its established market position and perceived stability.


The forward PE of 26.74 provides an optimistic outlook, implying expected growth in earnings. Walmart’s dividends remain attractive with a yield of 1.36%, signaling a commitment to returning value to shareholders. Its ex-dividend date set for December 13, 2024, ensures that investors have clarity on their dividend planning.


Walmart’s stock price demonstrates resilience and growth, with a 52-week range of $46.87 – $61.66 and an increase of +30.88% over the last year. This performance is particularly noteworthy given the beta of 0.50, indicating less volatility compared to the broader market, which might appeal to risk-averse investors.


From a liquidity standpoint, Walmart’s current ratio of 0.83 suggests that the company can cover its short-term liabilities, although the quick ratio of 0.20 points to a heavier reliance on inventory to do so. This is not unusual for a large retailer, but it does necessitate efficient inventory turnover, which Walmart appears to manage well, given its turnover rate of 8.79.


Operationally, Walmart exhibits sound financial efficiency with a return on equity (ROE) of 19.70%, return on assets (ROA) of 6.10%, and return on invested capital (ROIC) of 13.68%. These figures demonstrate Walmart’s ability to generate profits from its investments and assets effectively.


The company’s EBITDA of $35.63 billion further underlines its operational profitability, and the EBITDA margin of 5.50% is healthy for the retail industry. The operating cash flow of $35.73 billion and a sizeable free cash flow (FCF) of $15.37 billion underscore Walmart’s financial health, allowing it to invest in growth opportunities, service debt, and return capital to shareholders.


Walmart’s debt position, with total debt at $61.32 billion, is notable. However, with an enterprise value (EV) of $541.95 billion, the debt level appears manageable. The debt-to-EBITDA ratio of 1.72 indicates that Walmart is not excessively leveraged and should be able to service its debt from its earnings before interest, taxes, depreciation, and amortization.


The forward-looking valuation ratios, including the EV/EBITDA ratio of 15.21 and the EV/FCF ratio of 35.26, present Walmart as a company with solid future earnings potential relative to its enterprise value.


In summary, Walmart Inc. stands as a retail colossus with a proven track record of growth, profitability, and shareholder returns. While the retail sector faces various challenges, including competition from e-commerce platforms and fluctuating consumer spending patterns, Walmart’s scale, diversified product offerings, and investment in digital transformation position it to continue its role as a leading player in the global retail market.


This analysis is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult with a financial advisor before making investment decisions.

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