WMT Walmart
Dominant scale retailer, but market prices in fantasy 25% growth we can't underwrite.
The business
Walmart is the world's largest retailer, generating the bulk of revenue from grocery and general merchandise sold through ~10,000 stores and a growing e-commerce platform. It earns thin margins on enormous volume, leveraging its scale to undercut competitors on price.
Quality gate · 77/100
Moat & management
| Moat | wide moat |
| Source | scale |
| Trajectory | stable |
| Management | adequate |
Walmart's unmatched purchasing scale, logistics infrastructure, and rural store density create a durable cost advantage that competitors cannot easily replicate. The moat is stable — e-commerce investments defend against Amazon, but core retail is mature with limited room to widen the gap further.
Management runs sensible leverage (1.17x net debt/EBITDA) and modestly reduces share count, but heavy capex ($28B vs $12.5B FCF) limits flexibility and signals a competitive arms race rather than capital-light compounding.
Owner-earnings inputs
| Owner earnings (TTM) | 12.55B |
| Owner-earnings yield | 1.4% |
| Free-cash-flow yield | 1.4% |
| Growth used (normalized) | 6.0% |
| Market-implied growth (reverse DCF) | 25.0% |
| Terminal growth | 3.0% |
| Discount rate (hurdle) | 9.0% |
Projected owner earnings
| Yr | Owner earnings | Growth | PV |
|---|---|---|---|
| 1 | 13.31B | 6.0% | 12.21B |
| 2 | 14.06B | 5.7% | 11.83B |
| 3 | 14.81B | 5.3% | 11.44B |
| 4 | 15.55B | 5.0% | 11.02B |
| 5 | 16.27B | 4.7% | 10.58B |
| 6 | 16.98B | 4.3% | 10.12B |
| 7 | 17.66B | 4.0% | 9.66B |
| 8 | 18.31B | 3.7% | 9.19B |
| 9 | 18.92B | 3.3% | 8.71B |
| 10 | 19.48B | 3.0% | 8.23B |
Key risks
- Amazon and Costco continue eroding share in key categories
- Capex intensity consumes nearly all FCF, limiting owner returns
- Thin 4.6% operating margins offer no buffer if cost pressures rise
Catalysts
- High-margin advertising and marketplace businesses scale meaningfully
- Automation and supply-chain investments finally reduce capex intensity
Recent news
score · 8 articles
- What Does Walmart (WMT) Joining Fed Data Talks Mean For Its Pricing Power?
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- Should You Buy Walmart Stock Before Aug. 20?
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- Consumers Seek Value, Deal With Stress During Back-to-School Shopping Season
- Walmart's Expense Deleverage Raises Concerns Despite Sales Growth
- Retail Stocks Forecasts – Walmart, Target, and Costco Consolidate Ahead of Earnings
- 3 Boring but Brilliant Stocks to Buy in August
⚠ maintenance capex ≈ min(capex, D&A), capped at FCF · Price pays for ~25%/yr owner-earnings growth over 10y (reverse DCF); model credits 6%. · Rich vs our conservative value, but a quality business is not a short — stance is WAIT for a better price, not sell.