⚠️ This AI-generated report synthesizes publicly available information. AI can make mistakes. Please double check information in this report.
Walmart Inc.
Consumer Defensive | Discount Stores
⚡ Executive Summary
📊 The Bottom Line
Walmart Inc. is the world's largest retailer, demonstrating robust revenue growth through its diversified store formats and a strong omnichannel presence. The business benefits from massive scale and efficient supply chains, leading to a resilient consumer defensive model, even amid shifting economic landscapes.
⚖️ Risk vs Reward
At its current price of US$119.14, Walmart is trading within analyst target ranges, suggesting it is fairly valued. Potential upside exists from e-commerce growth and international expansion, while downside risks include intense competition and macroeconomic pressures affecting consumer spending. The risk/reward for long-term investors appears balanced.
🚀 Why WMT Could Soar
- • Continued expansion and optimization of its e-commerce capabilities could significantly boost sales and margins, capturing a larger share of the online retail market.
- • Successful integration and growth of international ventures, particularly in emerging markets, offer substantial untapped revenue potential for long-term growth.
- • Strategic investments in technology and automation to enhance supply chain efficiency and in-store operations could drive further cost reductions and improved profitability.
⚠️ What Could Go Wrong
- • Intensified competition from online rivals and discount retailers could lead to price wars, eroding Walmart's profit margins and market share.
- • A sustained economic downturn or inflationary pressures could significantly dampen consumer spending on discretionary items, negatively impacting sales volume and profitability.
- • Regulatory challenges, particularly concerning labor practices, antitrust, and international trade policies, could increase operational costs and limit growth opportunities.
🏢 Company Overview
💰 How WMT Makes Money
- • Walmart operates a vast network of retail and wholesale stores, including supercenters, supermarkets, warehouse clubs, and discount stores under the Walmart and Walmart Neighborhood Market brands.
- • The company generates significant revenue through its membership-only warehouse clubs (Sam's Club) and rapidly growing e-commerce platforms, such as walmart.com and international sites like flipkart.com.
- • Walmart primarily sells a wide range of grocery items, including dry goods, fresh produce, meat, and dairy, alongside health and beauty aids, pet supplies, household chemicals, and apparel.
- • The company also provides financial services, such as money transfers and bill payments, and offers health and wellness products, including pharmacy, optical, and hearing services.
- • Walmart leverages its massive purchasing power and logistics network to offer competitive prices, attracting a broad customer base globally.
Revenue Breakdown
Walmart U.S. Stores
69%
Operations of retail and wholesale stores, supercenters, and neighborhood markets in the United States.
Sam's Club
13%
Membership-only warehouse clubs offering bulk products and services.
International Segment
18%
Retail operations in various countries outside the United States, including e-commerce platforms.
🎯 WHY THIS MATTERS
Walmart's diversified revenue streams across various retail formats and geographies provide significant resilience against market fluctuations. Its strong presence in essential goods, particularly groceries, ensures stable demand, while its growing e-commerce segment positions it for future growth in online retail.
⭐ Competitive Advantage: What Makes WMT Special
1. Unrivaled Scale and Supply Chain
Walmart's immense global scale enables it to negotiate favorable terms with suppliers, resulting in lower costs for goods. Its sophisticated logistics and distribution networks are highly optimized, ensuring efficient inventory management and rapid product delivery. This operational efficiency translates into competitive pricing for consumers and healthy margins, a significant barrier to entry for smaller competitors.
2. Strong Brand Recognition and Customer Loyalty
With decades of operation, Walmart has cultivated a powerful brand synonymous with affordability and convenience. Its ubiquitous presence, both physical and online, has fostered deep customer loyalty, particularly among cost-conscious consumers. This brand equity allows Walmart to retain customers and attract new ones, even when faced with aggressive competition.
3. Omnichannel Retail Strategy
Walmart has successfully integrated its vast physical store footprint with a rapidly expanding e-commerce operation, creating a seamless omnichannel shopping experience. Customers can buy online and pick up in-store, or have groceries delivered, leveraging the existing store network as fulfillment centers. This blended approach maximizes customer reach and convenience, providing a distinct advantage over pure-play online or brick-and-mortar retailers.
🎯 WHY THIS MATTERS
These competitive advantages—scale, brand power, and an integrated omnichannel strategy—collectively reinforce Walmart's market leadership. They create significant barriers for new entrants and allow the company to adapt to evolving consumer behaviors while maintaining strong pricing power and operational efficiency, underpinning long-term profitability.
👔 Who's Running The Show
C. Douglas McMillon
President, CEO & Director
59-year-old C. Douglas McMillon has served as President, CEO & Director since 2014. He has been instrumental in Walmart's digital transformation, expanding its e-commerce capabilities and fostering an omnichannel retail strategy. His leadership focuses on innovation, efficiency, and international growth, driving the company's competitive positioning in a dynamic retail landscape.
⚔️ What's The Competition
The retail industry is highly competitive, characterized by intense price competition, evolving consumer preferences, and the rapid growth of e-commerce. Walmart faces competition from a diverse group of retailers, including traditional discount stores, grocery chains, warehouse clubs, and dominant online retailers. Success hinges on pricing, product assortment, supply chain efficiency, and the ability to offer convenient shopping experiences across multiple channels.
📊 Market Context
- Total Addressable Market - The global retail market is vast, driven by population growth and consumer spending. It's estimated to be multi-trillion US$, with steady growth fueled by disposable income and e-commerce penetration.
- Key Trend - The accelerating shift towards e-commerce and omnichannel shopping, requiring seamless integration of online and physical retail experiences to meet consumer demands.
Competitor
Description
vs WMT
Amazon.com, Inc.
A global e-commerce and cloud computing giant, dominant in online retail across numerous product categories.
Competes directly in online retail and groceries (Whole Foods). Amazon leverages its Prime membership for customer loyalty and rapid delivery, posing a significant threat to Walmart's e-commerce growth.
Target Corporation
A general merchandise retailer offering a wide range of products, known for its curated offerings and appealing store environment.
Competes in general merchandise and groceries with a focus on a slightly more upscale customer experience. Target has also invested heavily in omnichannel capabilities, mirroring some of Walmart's strategies.
Costco Wholesale Corporation
A membership-based warehouse club offering bulk goods at competitive prices.
Directly competes with Sam's Club. Costco appeals to bulk buyers and small businesses, often with higher perceived quality products and a strong private label brand, Kirkland Signature.
📊 Valuation & Analysis
📈 Wall Street Summary
Analyst Rating Distribution - 1 Sell, 2 Hold, 31 Buy, 9 Strong Buy
1
2
31
9
12-Month Price Target Range
Low Target
US$62
-48%
Average Target
US$124
+4%
High Target
US$145
+22%
Closing: US$119.14 (30 Jan 2026)
🚀 The Bull Case - Upside to US$145
1. Growth in Digital Advertising
High Probability
Walmart Connect, the company's retail media business, is growing rapidly. Expanding this high-margin segment to leverage its vast customer data could add billions in new revenue and significantly boost overall profitability, similar to Amazon's advertising success.
2. Health and Wellness Market Capture
Medium Probability
Further penetration into the health and wellness sector, including pharmacy, optical, and potentially broader healthcare services, could tap into a stable and growing market, providing additional revenue streams and enhancing customer loyalty beyond traditional retail.
3. Supply Chain Automation and AI Integration
Medium Probability
Increased automation in warehouses and the deployment of AI for demand forecasting and inventory management could lead to substantial cost savings and improved operational efficiency, directly impacting net income and free cash flow over the next few years.
🐻 The Bear Case - Downside to US$62
1. Intensifying Competition in E-commerce
High Probability
Despite Walmart's investments, competition from Amazon and other online retailers remains fierce. Failure to keep pace with delivery speeds, pricing, or product assortment could lead to market share loss in the critical e-commerce segment, impacting overall revenue growth.
2. Economic Downturn Impact on Consumer Spending
Medium Probability
A significant economic recession or prolonged period of high inflation could reduce discretionary consumer spending, even on value-oriented products. This would directly pressure Walmart's sales volumes and potentially force deeper discounting, eroding profit margins.
3. Wage Inflation and Labor Costs
Medium Probability
Rising minimum wage mandates and increasing labor costs across the retail sector could significantly impact Walmart's operational expenses, given its large workforce. While automation can offset some costs, sustained wage inflation could compress profit margins.
🔮 Final thought: Is this a long term relationship?
Owning Walmart for a decade hinges on its ability to maintain dominance in a transforming retail landscape. Its formidable scale, supply chain prowess, and established brand provide a durable moat. Success relies on continued innovation in e-commerce and digital services, alongside efficient management of labor costs and supply chain dynamics. If the company effectively navigates intense competition and evolving consumer habits, it could deliver steady, if not spectacular, returns. However, failure to adapt could erode its competitive edge, despite its current strengths.
📋 Appendix
Financial Performance
Metric
31 Jan 2025
31 Jan 2024
31 Jan 2023
Income Statement
Revenue
US$680.99B
US$648.13B
US$611.29B
Gross Profit
US$169.23B
US$157.98B
US$147.57B
Operating Income
US$29.35B
US$27.01B
US$20.43B
Net Income
US$19.44B
US$15.51B
US$11.68B
EPS (Diluted)
2.41
1.91
1.42
Balance Sheet
Cash & Equivalents
US$9.04B
US$9.87B
US$8.63B
Total Assets
US$260.82B
US$252.40B
US$243.20B
Total Debt
US$60.11B
US$61.32B
US$58.92B
Shareholders' Equity
US$91.01B
US$83.86B
US$76.69B
Key Ratios
Gross Margin
24.9%
24.4%
24.1%
Operating Margin
4.3%
4.2%
3.3%
Return on Equity
21.36
18.50
15.23
Analyst Estimates
Metric
Annual (31 Jan 2026)
Annual (31 Jan 2027)
EPS Estimate
US$2.64
US$2.97
EPS Growth
+5.1%
+12.6%
Revenue Estimate
US$707.5B
US$742.3B
Revenue Growth
+4.9%
+4.9%
Number of Analysts
38
39
Valuation Ratios
| Metric | Value | Description |
|---|---|---|
| P/E Ratio (TTM) | 40.94 | The trailing Price-to-Earnings ratio measures the current share price relative to the company's earnings per share over the past 12 months, indicating how much investors are willing to pay for each dollar of earnings. |
| Forward P/E | 40.12 | The forward Price-to-Earnings ratio is a measure of the current share price relative to estimated future earnings, offering insight into future valuation expectations. |
| Price/Sales (TTM) | 1.35 | The Price-to-Sales ratio compares the company's market capitalization to its total revenue over the past 12 months, useful for valuing companies with inconsistent earnings or in early growth stages. |
| Price/Book (MRQ) | 9.88 | The Price-to-Book ratio compares a company's market value to its book value per share from the most recent quarter, indicating how much investors are willing to pay for each dollar of assets after liabilities. |
| EV/EBITDA | 23.74 | Enterprise Value to EBITDA measures the total value of a company (market cap plus debt, minus cash) against its earnings before interest, taxes, depreciation, and amortization, offering a comprehensive valuation metric that considers debt. |
| Return on Equity (TTM) | 0.24 | Return on Equity (ROE) measures how much profit a company generates for each dollar of shareholders' equity over the past 12 months, indicating management's efficiency in using equity to generate profits. |
| Operating Margin | 0.04 | Operating Margin measures the percentage of revenue left after paying for operating expenses, indicating a company's efficiency in generating profits from its core operations. |