Why you shouldn’t be buying Walmart stock

We believe there are a few things to fear in WMT stock given its overall Weak operating performance and financial condition. But keeping in mind its Very High valuation, we think that the stock is Very Unattractive. Here is our multi-factor assessment.

But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio and is designed to reduce stock-specific risk while giving upside exposure

Let’s get into details of each of the assessed factors but before that, for quick background: Walmart (WMT) is a $831 Bil market cap company that operates global retail and wholesale units, including supercenters, supermarkets, warehouse clubs, and discount stores across three segments: U.S., International, and Sam’s Club.

[1] Valuation Looks Very High

This table highlights how WMT is valued vs broader market. For more details see: WMT Valuation Ratios

[2] Growth Is Weak

• Walmart has seen its top line grow at an average rate of 6.0% over the last 3 years
• Its revenues have grown 4.2% from $657 Bil to $685 Bil in the last 12 months
• Also, its quarterly revenues grew 2.5% to $166 Bil in the most recent quarter from $162 Bil a year ago.

This table highlights how WMT is growing vs broader market. For more details see: WMT Revenue Comparison

[3] Profitability Appears Very Weak

• WMT last 12 month operating income was $30 Bil representing operating margin of 4.3%
• With cash flow margin of 5.5%, it generated nearly $38 Bil in operating cash flow over this period
• For the same period, WMT generated nearly $19 Bil in net income, suggesting net margin of about 2.7%

This table highlights how WMT profitability vs broader market. For more details see: WMT Operating Income Comparison

[4] Financial Stability Looks Strong

• WMT Debt was $67 Bil at the end of the most recent quarter, while its current Market Cap is $831 Bil. This implies Debt-to-Equity Ratio of 8.1%
• WMT Cash (including cash equivalents) makes up $9.3 Bil of $262 Bil in total Assets. This yields a Cash-to-Assets Ratio of 3.5%

[4] Downturn Resilience Is Strong

WMT has been more resilient than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• WMT stock fell 26.0% from a high of $53.29 on 21 April 2022 to $39.43 on 17 June 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 28 July 2023
• Since then, the stock increased to a high of $105.05 on 13 February 2025 , and currently trades at $103.73

 
2020 Covid Pandemic

• WMT stock fell 16.5% from a high of $50.93 on 30 November 2020 to $42.51 on 4 March 2021 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 6 April 2022

 
2008 Global Financial Crisis

• WMT stock fell 26.5% from a high of $21.06 on 11 September 2008 to $15.47 on 4 February 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 22 May 2012

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – S&P 500, Russell, and S&P midcap. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.