Walmart (NYSE:WMT) is a name that needs no introduction. Walmart, founded in 1962 in Rogers, Arkansas by Sam Walton, has grown to become a household name and a veritable behemoth. Even as Amazon (AMZN), Costco (COST) has continued its rapid growth, it has maintained its position as the largest company in the United States by revenue. Walmart has digitized itself and gained novel capabilities over the last decade in order to remain relevant – and it has.
Walmart outperforms Amazon in terms of financial metrics. Amazon’s e-commerce sales generate very little profit. Walmart’s EPS is expected to reach $12 in 2026E, up from $6 in 2022E.
Analysts and traders agree on a positive outlook for 2023. The company is constantly expanding its vast array of products and services. Earnings growth is expected to be modest over the next few years.
The consensus rating on Wall Street remains a buy, with a high expected return over the next year. The market-implied outlook is bullish, with low volatility, until the middle of 2023 and the beginning of 2024.
Walmart has been steadily growing, albeit at a volatile profit rate. The company has balanced cash flows and should be able to withstand a weak holiday quarter if one occurs.
Walmart’s sales are still growing at a huge compared to its competitors. While e-commerce growth has not slowed, an 8% annual sales growth rate is nothing to worry for a company of this size and magnitude.
As of the last quarter, the company still had $11.6 billion in cash on hand, which is a large amount of cash in comparison to historical levels. While the company is now structurally positioned to pay around $2.25 billion in interest per quarter, it continues to generate significant cash from operations.
Walmart increased its full-year forecast, anticipating net sales to rise by 5.5% overall. If Walmart accomplishes this, it will be a significant achievement given that retail spending has declined for most retailers this year due to the economic environment. It would also demonstrate how Walmart’s position as a low-cost retailer allows it to maintain a competitive edge despite a decrease in spending.
While profitability is growing steadily the company will continue to generate profits for its shareholders.
What makes Walmart stand out is that you will still receive a guaranteed 1.59% yield. This is the second highest yield in the space from the largest player and the most secure in the industry.
In the current consumer environment, Walmart will be an outperformer. This, combined with its massive size, should allow it to maintain a strong position regardless of where the economy is headed, making Walmart a Strong Buy.
About Walmart
Walmart Inc. (NYSE: WMT) helps people around the world save money and live better — anytime and anywhere — in retail stores, online, and through their mobile devices. Each week, over 265 million customers and members visit approximately 11,500 stores under 56 banners in 27 countries and eCommerce websites. Walmart employs over 2.2 million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy and employment opportunity. Additional information about Walmart can be found by visiting corporate.walmart.com, on Facebook at facebook.com/walmart and on Twitter at twitter.com/walmart.
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