Investment Review №353. In Search of New Landmarks
Vadim Merkulov
Head of Analytics department
Walmart. Scale Meets a Better Mix
The scale of the business and the improvement in its earnings structure make WMT stock an attractive buy with a target price of $124
About company
Walmart Inc. (WMT) is one of the world’s largest omnichannel retailers, operating more than 10,900 stores and eCommerce platforms across 19 countries. The company serves approximately 280 million customers and members each week and generated $713 billion in revenue in FY2026. Its operations comprise Walmart U.S., Walmart International and Sam’s Club.
Price dynamics WMT, $
Key Investment Theses
Omnichannel Scale Is Becoming a Profit Driver. Walmart’s physical store network is increasingly functioning as a high-density fulfillment infrastructure. Global eCommerce sales grew 23% year-over-year in Q2 FY2027, including 24% growth in Walmart U.S. Store-fulfilled delivery increased 40%, while U.S. marketplace net sales grew more than 50%. This scale should continue to improve delivery economics, increase purchase frequency and strengthen Walmart’s competitive position against both traditional retailers and digital platforms.
Higher-Margin Businesses Are Reshaping the Earnings Mix. Walmart is expanding beyond low-margin merchandise sales into advertising, membership, marketplace and fulfillment services. Global advertising business grew 38% in the latest quarter, Walmart Connect grew 43% excluding VIZIO, and global membership-fee revenue rose 17%. The growing contribution of advertising and membership, combined with improving eCommerce economics, should enable operating income to grow faster than revenue.
Defensive Scale Continues to Drive Market-Share Gains. Walmart’s value positioning, grocery exposure and broad assortment provide resilience during periods of pressure on household budgets. Walmart U.S. comparable sales rose 2.6% excluding fuel, supported by 1.5% transaction growth, while the company reported market-share gains across income cohorts. Record second-quarter Walmart+ net additions further indicate that customers increasingly value the combination of price and convenience.
Raised Guidance Supports Earnings Visibility. Following its strong first-half performance, management raised FY2027 guidance and now expects constant-currency net sales growth of 4.0%–5.0%, adjusted operating income growth of 7.0%–8.5%, and adjusted EPS of $2.80–$2.87. Walmart also repurchased $5.1 billion of shares during the first half, with $25.1 billion remaining under its authorization. The combination of resilient core demand, improving eCommerce economics and a more profitable business mix supports sustained earnings growth and a premium valuation.
The target price for WMT has been evaluated at $124, with a "Buy" recommendation. It is advised to implement a stop-loss at $98 to mitigate potential losses.
