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Walmart (WMT) Up 14% in 3 Months: Is Now a Good Time to Buy?
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Walmart Inc. (WMT - Free Report) continues to strengthen its position as a dominant force in both brick-and-mortar and e-commerce retail. The world’s largest retailer has seen its shares surge 14.2% in the past three months, outpacing the industry’s 12.3% growth. The company’s unmatched scale and operational prowess have also helped it outperform the broader Zacks Retail-Wholesale sector and the S&P 500’s respective gains of 2.8% and 7.1%.
In the most recent trading session, Walmart's stock closed at $68.24, quite close to its 52-week high of $69.04. This proximity underscores investor confidence and market optimism about this omnichannel retailer’s prospects. Additionally, the stock is trading above its 50-day and 200-day moving averages, signaling strong upward momentum.
From a valuation perspective, we note that the stock is trading at a forward 12-month P/E ratio of 27.03, which exceeds the industry average of 24.78 and is also closer to its five-year high of 27.37. This premium valuation reflects investors' willingness to pay for Walmart's expected growth and stability. However, the pertinent question is — Will Walmart maintain its impressive performance trajectory?
WMT Trades Above 50-Day & 200-Day Average
Image Source: Zacks Investment Research
Decoding Walmart’s Omnichannel Brilliance
With more than 10,500 stores, spanning multiple brands and formats across 24 countries, Walmart has crafted innovative omnichannel experiences from the ground up to cater to customers’ rising need for speed and convenience. The company has been strengthening its physical fleet, which plays a dual role by catering to customers directly and also fulfilling a considerable chunk of the company’s e-commerce sales. Walmart has been focused on store remodeling in an attempt to upgrade them with advanced in-store and digital innovations.
The integration of online and offline channels, including services like in-store pickup, same-day delivery, and ship-from-store options, has helped it provide a seamless shopping experience for customers both domestically and internationally. Additionally, the company has been undertaking several efforts to enhance merchandise assortments. These strategies enhance Walmart's competitive advantage, enabling it to reach a broader customer base and drive higher sales volumes.
The company’s strategic investments in technology and e-commerce have positioned it as a formidable competitor in the online retail space. Initiatives like Walmart GoLocal, Walmart Luminate, Walmart Connect and Sam’s Club MAP demonstrate Walmart's commitment to enhancing customer experience and operational efficiency.
Moreover, Walmart's delivery capacities and services have set a new standard in retail logistics, combining efficiency with customer-centric innovation. With its Walmart+ membership program and services like Express Delivery, the company has bolstered its delivery capabilities, which have been a key e-commerce driver.
In the latest quarter, Walmart’s global e-commerce sales surged 21% on store-fulfilled pickup & delivery and marketplace and formed 18% of the company’s overall net sales. E-commerce penetration increased across all markets. This remarkable performance underscores Walmart's successful adaptation to the digital age and its potential for sustained e-commerce expansion.
In the current market, where consumers demand flexibility and convenience, Walmart's omnichannel capabilities are more relevant than ever. Many other retailers like Kroger (KR - Free Report) , Costco (COST - Free Report) and Target (TGT - Free Report) have also been sharpening their omnichannel edges to stay firm in the game.
Is WMT Really a Dividend King?
Walmart's financial strength and commitment to returning value to shareholders have made it popular as a dividend king. The supermarket giant flaunts a robust dividend history, hiking dividends for 50 straight years now. This stable commitment to dividend growth underscores Walmart's financial flexibility and robust cash flow generation.
In the first quarter of fiscal 2025, the company paid dividends worth $1.7 billion and repurchased shares worth $1.1 billion. As of the first-quarter earnings release, the company had $15.5 billion remaining under its share buyback plan. Walmart currently has a dividend payout of 35.8% and a dividend yield of 1.2%. With an annual free cash flow return on investment of 8.9%, the dividend payments are likely to be sustainable.
Walmart's dividend policy reflects a balanced approach, combining consistent shareholder returns with prudent reinvestment in the business. This strategy indicates that the company can maintain its leadership position in the retail space while rewarding its shareholders with reliable and growing dividends.
Growth Prospects Ahead?
Walmart’s strong omnichannel initiatives and a highly diversified business have been well narrating its growth tale. Strengths like these, along with a budding advertising business and efficient cost-containment measures, pave the way for a bright future. Encouragingly, Walmart raised its guidance for fiscal 2025 on its last earnings call.
The company expects consolidated net sales growth for fiscal 2025 in the upper end or slightly higher than the 3-4% range at constant currency or cc. Consolidated operating income growth is now expected to come at the upper end or slightly above the 4-6% range at cc. Finally, Walmart envisions adjusted EPS for fiscal 2025 to come in the upper end or slightly higher than the $2.23-$2.37 band, suggesting growth from the $2.22 recorded in fiscal 2024.
Estimates Paint a Bright Picture
Reflecting the positive sentiment around Walmart, the Zacks Consensus Estimate for earnings per share has seen upward revisions. Over the past 30 days, analysts have increased their estimates for the current and next fiscal year by 0.4% to $2.43 and by 0.8% to $2.67 per share, respectively. These estimates indicate expected year-over-year growth rates of 9.5% and 10.1%, respectively.
Image Source: Zacks Investment Research
Crafting Your Investment Mantra
Walmart’s recent stock performance, coupled with its strategic investments in technology, e-commerce and omnichannel capabilities, places it well for continued growth. The company’s business stability, strong financial health and commitment to shareholder returns make it an attractive choice for investors seeking long-term growth. Despite its current overvaluation, the potential for continued expansion and market share gains justifies the premium.
All said, we believe that investing in Walmart now offers the chance to capitalize on its rising success and secure a stake in one of the most resilient and innovative retailers in the market. Rightly, Walmart currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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Walmart (WMT) Up 14% in 3 Months: Is Now a Good Time to Buy?
Walmart Inc. (WMT - Free Report) continues to strengthen its position as a dominant force in both brick-and-mortar and e-commerce retail. The world’s largest retailer has seen its shares surge 14.2% in the past three months, outpacing the industry’s 12.3% growth. The company’s unmatched scale and operational prowess have also helped it outperform the broader Zacks Retail-Wholesale sector and the S&P 500’s respective gains of 2.8% and 7.1%.
In the most recent trading session, Walmart's stock closed at $68.24, quite close to its 52-week high of $69.04. This proximity underscores investor confidence and market optimism about this omnichannel retailer’s prospects. Additionally, the stock is trading above its 50-day and 200-day moving averages, signaling strong upward momentum.
From a valuation perspective, we note that the stock is trading at a forward 12-month P/E ratio of 27.03, which exceeds the industry average of 24.78 and is also closer to its five-year high of 27.37. This premium valuation reflects investors' willingness to pay for Walmart's expected growth and stability. However, the pertinent question is — Will Walmart maintain its impressive performance trajectory?
WMT Trades Above 50-Day & 200-Day Average
Image Source: Zacks Investment Research
Decoding Walmart’s Omnichannel Brilliance
With more than 10,500 stores, spanning multiple brands and formats across 24 countries, Walmart has crafted innovative omnichannel experiences from the ground up to cater to customers’ rising need for speed and convenience. The company has been strengthening its physical fleet, which plays a dual role by catering to customers directly and also fulfilling a considerable chunk of the company’s e-commerce sales. Walmart has been focused on store remodeling in an attempt to upgrade them with advanced in-store and digital innovations.
The integration of online and offline channels, including services like in-store pickup, same-day delivery, and ship-from-store options, has helped it provide a seamless shopping experience for customers both domestically and internationally. Additionally, the company has been undertaking several efforts to enhance merchandise assortments. These strategies enhance Walmart's competitive advantage, enabling it to reach a broader customer base and drive higher sales volumes.
The company’s strategic investments in technology and e-commerce have positioned it as a formidable competitor in the online retail space. Initiatives like Walmart GoLocal, Walmart Luminate, Walmart Connect and Sam’s Club MAP demonstrate Walmart's commitment to enhancing customer experience and operational efficiency.
Moreover, Walmart's delivery capacities and services have set a new standard in retail logistics, combining efficiency with customer-centric innovation. With its Walmart+ membership program and services like Express Delivery, the company has bolstered its delivery capabilities, which have been a key e-commerce driver.
In the latest quarter, Walmart’s global e-commerce sales surged 21% on store-fulfilled pickup & delivery and marketplace and formed 18% of the company’s overall net sales. E-commerce penetration increased across all markets. This remarkable performance underscores Walmart's successful adaptation to the digital age and its potential for sustained e-commerce expansion.
In the current market, where consumers demand flexibility and convenience, Walmart's omnichannel capabilities are more relevant than ever. Many other retailers like Kroger (KR - Free Report) , Costco (COST - Free Report) and Target (TGT - Free Report) have also been sharpening their omnichannel edges to stay firm in the game.
Is WMT Really a Dividend King?
Walmart's financial strength and commitment to returning value to shareholders have made it popular as a dividend king. The supermarket giant flaunts a robust dividend history, hiking dividends for 50 straight years now. This stable commitment to dividend growth underscores Walmart's financial flexibility and robust cash flow generation.
In the first quarter of fiscal 2025, the company paid dividends worth $1.7 billion and repurchased shares worth $1.1 billion. As of the first-quarter earnings release, the company had $15.5 billion remaining under its share buyback plan. Walmart currently has a dividend payout of 35.8% and a dividend yield of 1.2%. With an annual free cash flow return on investment of 8.9%, the dividend payments are likely to be sustainable.
Walmart's dividend policy reflects a balanced approach, combining consistent shareholder returns with prudent reinvestment in the business. This strategy indicates that the company can maintain its leadership position in the retail space while rewarding its shareholders with reliable and growing dividends.
Growth Prospects Ahead?
Walmart’s strong omnichannel initiatives and a highly diversified business have been well narrating its growth tale. Strengths like these, along with a budding advertising business and efficient cost-containment measures, pave the way for a bright future. Encouragingly, Walmart raised its guidance for fiscal 2025 on its last earnings call.
The company expects consolidated net sales growth for fiscal 2025 in the upper end or slightly higher than the 3-4% range at constant currency or cc. Consolidated operating income growth is now expected to come at the upper end or slightly above the 4-6% range at cc. Finally, Walmart envisions adjusted EPS for fiscal 2025 to come in the upper end or slightly higher than the $2.23-$2.37 band, suggesting growth from the $2.22 recorded in fiscal 2024.
Estimates Paint a Bright Picture
Reflecting the positive sentiment around Walmart, the Zacks Consensus Estimate for earnings per share has seen upward revisions. Over the past 30 days, analysts have increased their estimates for the current and next fiscal year by 0.4% to $2.43 and by 0.8% to $2.67 per share, respectively. These estimates indicate expected year-over-year growth rates of 9.5% and 10.1%, respectively.
Image Source: Zacks Investment Research
Crafting Your Investment Mantra
Walmart’s recent stock performance, coupled with its strategic investments in technology, e-commerce and omnichannel capabilities, places it well for continued growth. The company’s business stability, strong financial health and commitment to shareholder returns make it an attractive choice for investors seeking long-term growth. Despite its current overvaluation, the potential for continued expansion and market share gains justifies the premium.
All said, we believe that investing in Walmart now offers the chance to capitalize on its rising success and secure a stake in one of the most resilient and innovative retailers in the market. Rightly, Walmart currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.