What’s New With Walmart’s Stock?

[Note: Walmart’s Fiscal Year 2025 ended on January 31, 2025]

Walmart’s (NYSE: WMT) latest quarterly results delivered a mixed bag, sparking a 7% drop in shares on February 20th. The company’s Q4 results exceeded analyst estimates on both the top and bottom lines. Walmart’s Q4 beat was tempered by a cautious outlook, as the retailer forecast slowing profit growth, despite strong holiday-quarter results: 4% year-over-year (y-o-y) revenue growth, 9% y-o-y adjusted operating income increase, and 20% e-commerce sales surge. Notably, the company’s stock is up 8% year-to-date compared to a 4% growth in the S&P 500 index (as of Feb. 20). In comparison, WMT’s peer Target (NYSE: TGT) has seen its stock down 6% during the same period.

Image by Alexa from Pixabay

In FY’26 (year ending January 2026), Walmart forecasts 3-4% net sales growth and a 3.5-5.5% increase in adjusted operating income, on a constant currency basis. This outlook takes into account a 150-basis-point drag from its Vizio acquisition and the impact of a non-leap year. Notably, this growth rate is slower than the 9.7% adjusted operating income increase Walmart achieved in FY’25. The company also expects adjusted earnings of $2.50-$2.60 per share for the full year, excluding the potential impact of pending tariffs. Separately, if you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked over 91% returns since inception.

We have revised Walmart’s Valuation to $98 per share, based on a $2.56 expected EPS and a 38.4x P/E multiple for the fiscal year 2026 – almost in line with the current market price. We also forecast Walmart’s Revenues to be $704 billion for the fiscal year 2026, up 3% y-o-y. It should be noted that Walmart owes $45.5 billion in debt and has $9 billion in cash position currently. With financing rates significantly higher than in previous years, this significant debt not only increases long-term risk for the retailer but also interest costs. Compounding this challenge, the retailer experienced decelerating U.S. comparable sales growth throughout FY’25. While quarterly growth rates remained positive, they showed signs of slowing: 4.9% in Q1’25, 4.2% in Q2’25, 5.1% in Q3’25, and 4.6% in Q4’25.

In Q4, Walmart’s transactions were 2.8% higher during the quarter and the average ticket was up 1.8%. The company’s revenue rose 4.1% y-o-y to $180.6 billion. In addition, WMT’s global advertising business grew approximately 29% during the quarter, including 24% for Walmart Connect in the U.S.  The retailer’s adjusted EPS came in at $0.66, up 10% y-o-y, due to growth in operating income in Q4.

The increase in WMT stock over the last 4-year period has been far from consistent, with annual returns being considerably more volatile than the S&P 500. Returns for the stock were 2% in 2021, 0% in 2022, 13% in 2023, and 74% in 2024. The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.

It is helpful to see how its peers stack up. WMT Peers shows how Walmart’s stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.

[1] Returns as of 2/21/2025
[2] Cumulative total returns since the end of 2016