Walmart (WMT) Analysis

This report is auto-generated by an AI stock research platform for informational purposes only. The content is for general information and research reference, and does not constitute financial advice. Data may lag or be incomplete. Always conduct your own research and consult qualified professionals before making any financial decisions. # [Qiltrack AI] Walmart Inc (WMT) 3-Minute Overview > **💡 One-Sentence Summary** > > Simply put, Walmart is the world’s largest brick‑and‑mortar retailer that’s steadily turning itself into a low‑volatility, tech‑enabled cash machine (e‑commerce, ads, automation) rather than just a grocery and discount chain. > **📍 Basic Profile** > > Market Cap **$1,028 billion** · Retail · NASDAQ · Price **$126.73** > **⚡ 3 Things You Should Know** > > 1. 💰 Quality Compounder: Revenue has grown only ~5% annually, but EPS grew >20% over 3 years and ROE is a strong ~24%—it’s quietly turning a slow‑growth retail base into solid per‑share value via mix upgrade, efficiency, and buybacks. > > 2. 📈 “New Walmart” Story: The market is paying a tech‑like **47x PE** for a retailer because of momentum in e‑commerce, advertising, and automation—if these higher‑margin “digital” bets keep scaling, today’s valuation can be justified; if they stall, the stock can de‑rate. > > 3. ⚠️ Stability Comes With Trade‑offs: Low beta (~0.66), a clean balance sheet, and a long dividend track record (Dividend King, payout ~34%, yield ~0.8%) make it a defensive compounder—but the high multiple + recent insider selling means upside is likely steady, not spectacular, and sensitive to any earnings wobble. --- > **🎯 Quick Health Check** > > | Dimension | Rating | Details | > |------------------|------------------------|---------| > | Profitability | Strong💪 | Net margin 3.1%, ROE ~23.7%, high asset turnover (2.6x) for a retailer | > | Growth Rate | Steady📈 | Revenue ~5%/yr, EPS 3‑yr CAGR ~24% (helped by margin mix and efficiency) | | Financial Health | Healthy💚 | Debt/equity ~0.52, interest coverage ~13x, but current ratio <1 (normal for big-box retail) | > | Valuation | Expensive | PE TTM ~47.6x, clearly above “classic Walmart” levels and most retailers | --- ## 📋 Layer 2: 2-Minute Deep Dive ### 📊 How Does This Company Make Money? **Business Model in One Sentence:** Walmart sells groceries and general merchandise to consumers and small businesses through stores and online channels, making money on thin product margins, high volume, plus growing higher‑margin revenue streams like e‑commerce services and advertising. **Revenue Breakdown (conceptual, not exact % from this dataset):** | Business | Share | Trend | Comment | |---------------------------------|-------|-------|---------| | US & International Retail (in‑store + online, grocery + general merchandise) | Majority | ↑ | Core engine; grocery is sticky/defensive, general merchandise more cyclical | | Sam’s Club / Membership | Mid | ↑ | Membership and bulk retail; more stable and fee‑driven | | E‑commerce & Marketplace | Growing slice | ↑↑ | Faster‑growing, increasingly important for long‑term story | | Advertising & Other Services (e.g., Walmart Connect) | Small but rising | ↑↑ | High‑margin; key reason the market is giving Walmart a “premium” multiple | **Profitability Metrics:** | Metric | Value | Ranking vs typical retail | Interpretation | |----------------|-----------|---------------------------|----------------| | Gross Margin | 24.9% | Average for big‑box/grocery | Thin by tech standards, normal for food + mass retail | | Operating Margin | 4.2% | Decent | Discipline on costs; any small improvement boosts EPS a lot at this scale | | Net Margin | 3.1% | Top tier for grocery‑heavy players | Shows efficiency and scale advantage | | ROE (TTM) | 23.7% | Excellent (>20%) | Very strong returns on equity despite low margins—scale + turn + leverage working well | In other words, Walmart doesn’t rely on fat margins; it wins with scale, fast asset and inventory turnover (2.6x asset, 9.3x inventory), and increasingly by layering higher‑margin “digital” revenues on top. --- ### 📈 How’s the Growth? **Growth Assessment:** Steady, with improving quality. | Metric | Latest Snapshot | vs History | Trend | |------------------|-----------------------------|-----------|-------| | Revenue Growth | ~5.3% 3‑yr CAGR, ~5.0% 5‑yr | Consistent | Steady, not hyper‑growth | | EPS Growth | ~24.2% 3‑yr CAGR, 11.5% 5‑yr| Faster than sales | Profit per share compounding nicely | **Earnings Track Record (recent 4 quarters):** | Quarter (FY end) | EPS Expected | EPS Actual | Surprise | |------------------|-------------:|-----------:|---------:| | 2026‑03‑31 | 0.7334 | 0.74 | +0.9% 😀 | | 2025‑12‑31 | 0.6068 | 0.62 | +2.2% 😀 | | 2025‑09‑30 | 0.7486 | 0.68 | −9.2% 😟 | | 2025‑06‑30 | 0.5816 | 0.61 | +4.9% 😀 | **Growth Quality:** - Not driven by aggressive price hikes alone; a lot comes from: - More online volume and omnichannel (pickup, delivery) - Operating leverage and automation - Share repurchases shrinking the share count (supported by a fresh **$30B buyback** plan) - One recent quarter miss shows it’s not flawless, but overall trend is “slight beats” and stable growth. So this is not a hyper‑growth stock; it’s a slow‑and‑steady revenue grower that’s getting “smarter” and more profitable per share. --- ### 💰 Financial Health Check **One Sentence:** Walmart looks like a household with a very stable, high salary, moderate mortgage, and strong ability to pay interest—plus constant reinvestment into its house (stores/tech) rather than hoarding cash. | Metric | Value | Safe Zone | Assessment | |---------------------|---------|------------------|------------| | Debt to Equity | 0.52 | <0.6 usually fine | ✅Safe – moderate leverage, reasonable for stable cash flows | | Long‑term D/E | 0.35 | <0.6 | ✅Conservative | | Interest Coverage | 13.1x | >5x | ✅Very comfortable | | Current Ratio | 0.79 | >1.5 ideal, but retail ≈1 or less | ⚠️Tight but typical for big retailers (they turn inventory into cash quickly) | | Quick Ratio | 0.20 | >1 ideal | ⚠️Low, but again normal because inventory is the main current asset | | Cash Flow/Share TTM | $10.33 | >0 | ✅Strong and supports both capex and returns to shareholders | In plain language: no obvious balance sheet red flag; this is not a “fragile” business. --- ### 🏷️ Is It Expensive Now? **Price Position (52-week range):** - 52‑Week Low: **$79.81** - 52‑Week High: **$134.69** - Current: **$126.73** Approximate position within the range: \[ \text{Position} \approx \frac{126.73 - 79.81}{134.69 - 79.81} \approx 0.85\ (\text{85th percentile}) \] So it’s **closer to the high** than the low. | Position Range | Cheap Zone | Fair Zone | Pricey Zone | |----------------|-----------|-----------|-------------| | Criteria | 0–33% | 33–66% | 66–100% | | **Current** | | | ● (≈85%) | **Valuation Comparison:** We don’t have historical PE in the data, but context: | Comparison | Current | Reference | Assessment | |--------------------|----------------|------------------------|-----------| | vs Own History | PE ~47.6x TTM | Historically much lower (often teens–20s) | Very elevated vs “old Walmart”; market pricing a new, more digital Walmart | | vs Typical Retail | PE ~47.6x | Many large retailers: mid‑teens to 20s | High by a large margin | | PS (sales multiple)| PS ~1.46x | Retail often <1x | Also on the rich side for a grocer/mass merchant | **What the Current Valuation is Betting On:** - E‑commerce, advertising, and automation will: - Keep revenue growth solid (high single digits wouldn’t surprise the market) - Expand margins and keep EPS growth well above sales growth - Dividend and buybacks will continue reliably (Dividend King + $30B repurchase) - Walmart remains the structural winner in US mass retail, not displaced by Amazon or discounters. If those things hold, you’re paying up for a “steady compounder with tech upside.” If growth slips back to more like pure GDP + inflation with no margin upside, this multiple can compress. --- ### 📰 Any Recent News? | Date (approx) | Event | Impact | |---------------|-------|--------| | Feb 2026 | Earnings beat + new **$30B buyback** + **dividend hike** | **Positive** – signals confidence in cash flow and shareholder returns; supports the “quality compounding” story. | | Feb 2026 | Dividend raised ~5% | **Positive** – keeps Dividend King streak alive; fits low‑volatility income profile. | | Feb 2026 | Multiple brokers (Telsey, Rothschild & Co Redburn) **raise price targets** ($135–150) and reiterate Buy/Outperform | **Positive** – Street leaning bullish, especially on digital momentum and omnichannel leadership. | | Feb 2026 | Q4 deep‑dive articles: strong e‑commerce, ads, operating income; next‑quarter guidance slightly soft vs estimates | **Mixed** – operational story looks good, but guidance not “blowout,” which can matter at a high valuation. | | Feb 2026 | Cramer, Zacks, others highlighting Walmart as a trending, high‑quality retail play | **Positive for sentiment** – adds to momentum and visibility. | --- ## 📊 Layer 3: 3-Minute Complete Analysis ### I. Detailed Financial Data (trend‑style summary) We don’t have full multi‑year tables in the dataset, but we can infer: **Profitability Trends (3–5 year feel):** | Metric | This Period (TTM) | 3–5 Year Direction | 3-Year Trend | |------------|-------------------|--------------------|--------------| | Gross Margin | 24.9% | Slightly up / stable | → / mild ↑ (benefit from mix and scale) | | Net Margin | 3.1% | Slight improvement | ↑ from “classic” low‑2% zone toward ~3%+ | | ROE | 23.7% | Strong, improved | ↑, aided by better profits and steady leverage | **Growth Trends:** | Metric | 3Y CAGR | 5Y CAGR | 3-Year Trend | |----------------|---------|---------|--------------| | Revenue Growth | 5.27% | 4.99% | → steady | | EPS Growth | 24.21% | 11.53% | ↑ faster than sales, showing improving profitability per share | Interpretation: revenue growth is moderate but very consistent; EPS growth is meaningfully better—this is what you want to see in a mature, mega‑cap consumer name. --- ### II. Earnings Track Record **Last 4 Quarters vs Expectations:** | Quarter (FY) | EPS Expected | EPS Actual | Surprise | |--------------|-------------:|-----------:|---------:| | 2026‑03‑31 | 0.7334 | 0.74 | +0.9% 😀 | | 2025‑12‑31 | 0.6068 | 0.62 | +2.2% 😀 | | 2025‑09‑30 | 0.7486 | 0.68 | −9.2% 😟 | | 2025‑06‑30 | 0.5816 | 0.61 | +4.9% 😀 | **Earnings Trend Interpretation:** - 3 beats out of 4, with one notable miss: - The miss signals that near‑term execution or macro factors can still surprise negatively. - But quick return to modest beats suggests the business is resilient, not structurally broken. - At a **47x PE**, even small misses (like that −9% quarter) can cause outsized stock volatility versus the fundamentals. --- ### III. What the Market Thinks **Analyst Ratings (most recent period 2026‑02‑01):** | Rating | Count | Percentage (approx) | |-----------------|-------|---------------------| | Strong Buy/Buy | 14 + 32 = 46 | ~94% | | Hold | 3 | ~6% | | Sell/Strong Sell| 0 | 0% | This is an unusually bullish consensus for a mega‑cap—essentially **no one** is bearish at the moment. **Target Price:** We don’t have exact consensus target numbers in the data, but we see: - Some price targets recently raised to **$135–150**. - With the stock at **$126.73**, that implies: - Upside of roughly **6–18%** to the latest bullish targets. **Insider Activity (last few weeks):** All recent filings show **selling or share reductions** by multiple executives: - Examples: - Nicholas Christopher James: −34,082 shares (Sell) - Watkins Latriece: −10,000 shares (Sell) - Several “F” transactions (typically tax withholding / share settlements) – also net reductions Net effect: **recent insider flow is selling, not buying.** > How to interpret this: > - Insider selling is common at large, mature companies (diversification, tax, planned sales). > - But at a rich valuation, lack of insider buying + consistent selling is at least a signal that insiders don’t see the stock as “obviously cheap” right now. --- ### IV. Key Risk Alerts 1. **Valuation Risk (Multiple Compression):** - PE near 48x is high for a giant retailer. - If growth slows or digital/ads momentum disappoints, the stock could de‑rate even if the business remains strong → results in **flat or negative returns** despite okay fundamentals. 2. **Execution Risk in “New Walmart”:** - The premium story rests on e‑commerce, advertising, and automation. - If these initiatives don’t translate into sustained margin expansion (e.g., due to competition from Amazon, Target, dollar stores, or regulatory pressures on data/ads), Walmart could revert in the market’s eyes to a “plain” low‑margin retailer → growth story fades, multiple compresses. 3. **Retail & Macro Sensitivity:** - While Walmart is defensive versus many retailers, it still faces: - Consumer spending shifts - Food price deflation/inflation swings - Wage and logistics cost pressures - If margins get squeezed and Walmart chooses to cut prices aggressively to maintain share (which it often does), that protects the brand but can hit profits → **short‑term EPS pressure** against a high market expectation bar. --- ## 🎬 Summary & Next Steps > **📝 Three-Sentence Summary** > > **What it is:** Walmart is a massive, defensive retail platform steadily morphing into a tech‑enabled, omnichannel ecosystem with growing contributions from e‑commerce, advertising, and automation. > **Key strength:** It combines scale, resilient cash flow, strong ROE, dividend and buybacks, and lower volatility into a high‑quality compounding machine that still manages mid‑single‑digit sales growth and faster EPS growth. > **Key risk:** You’re paying a rich, almost “tech‑like” multiple for that safety and transformation story, so any stumble in growth, margins, or digital execution could lead to noticeable multiple compression even if the underlying business remains solid. --- > **🔍 Want to Learn More?** > > • Want to know if this company has a strong moat? → Try 【Buffett Mode】 to dig into Walmart’s cost, scale, and network advantages. > • Want to check for hidden landmines? → Try 【Muddy Mode】 to stress‑test risks like wage pressure, competition, and valuation downside. > • Thinking of it as a growth + quality stock and want to see if the current price makes sense? → Try 【Musk Mode】 to model scenarios for digital growth, margin expansion, and long‑term returns.