WALMART INC.

Recommendation history

• —HoldHOLD: Walmart delivered a strong Q3—constant-currency sales rose 4.4%, Walmart U.S. comps increased 4.9%, U.S. eCommerce grew 24%, and adjusted EPS was $1.53—but adjusted operating income grew only 3% and management expects full-year operating-income growth at the low end of 7%-7.5%. The share-taking, omnichannel model remains compelling, but the call did not establish an earnings inflection: alternative profit streams are expected to “continue to build,” while late-October softness and possible U.S. deflation create near-term margin and sales uncertainty.
• —HoldHold: Walmart delivered an excellent Q2, with constant-currency revenue up 7.5% to more than $140 billion, U.S. comps up 9.3%, eCommerce up 97%, and adjusted EPS up 23% to $1.56; gross margin expanded 63 basis points. However, the earnings quality is clouded by stimulus and stay-at-home tailwinds, grocery growth lagging competitors, $1.5 billion of COVID costs, and no FY2021 guidance, leaving the post-pandemic earnings baseline too uncertain for a clean buy.
• —HoldHold: Walmart delivered a strong Q1, with constant-currency revenue up 5.8% to more than $132 billion, U.S. comps up 6%, global eCommerce up 43%, and adjusted EPS of $1.69, up 43%. However, stimulus materially aided results, while wage, technology, freight and inflation costs are pressuring expenses; the raised full-year outlook calls for low-to-mid-single-digit sales growth, high-single-digit operating-income growth and low-double-digit EPS growth, but leaves the back half unchanged and uncertain.
• —HoldHold: Walmart exited FY2023 with strong momentum—Q4 constant-currency sales rose 8%, adjusted EPS was $1.71, and adjusted operating income grew nearly 7%—but FY2024 guidance is deliberately cautious at 2.5%-3% sales growth, about 3% operating-income growth, and adjusted EPS of $5.90-$6.05, implying a slight EPS decline. The bull case is sustained share gains, Sam’s Club strength, and higher-margin advertising, Marketplace, and fulfillment services; the tension is that food inflation and mix pressure remain, while the promised margin inflection is not yet quantified.
• —BuyBuy: Walmart exited FY24 with 5.6% constant-currency sales growth, over 8% adjusted operating-income growth, 15% ROI, and eCommerce losses down more than 40%. FY25 guidance calls for 3%-4% constant-currency sales growth and 4%-6% operating-income growth, supported by advertising, membership, automation, and share gains, but the outlook still assumes SG&A deleverage, persistent general-merchandise weakness, and near-term VIZIO dilution.
• —BuyBuy: Walmart delivered a broad-based beat, with constant-currency sales up 6.1%, operating income up 9.8%, adjusted EPS up nearly 14% to $0.58, and raised FY25 guidance to 4.8%-5.1% sales growth, 8.5%-9.25% operating-income growth and $2.42-$2.47 adjusted EPS. The core value-and-convenience proposition is gaining share, while advertising, membership and marketplace are making profit growth more durable; the main tension is that e-commerce remains loss-making and management gave no timetable for profitability, while GM mix and digital SG&A remain pressures.
• —HoldHold: Walmart delivered solid momentum—U.S. comp sales rose 1.8% with traffic up 1.3%, U.S. e-commerce GMV grew 67%, and adjusted EPS was $1.08—but gross margin fell 11 bps companywide as price investment and e-commerce mix offset procurement savings. The raised FY2018 adjusted EPS outlook of $4.30-$4.40 is encouraging, but the modest profit growth and ongoing digital-investment burden do not yet make this a clean buy.