why should you invest in walmart stocks

The following is a detailed analysis of investing in Walmart Inc., covering its core competitiveness, financial performance, industry status, risk factors and future potential:

 1. Financial stability and growth potential

1.  Continuous revenue growth
   
   In fiscal 2025, Walmart’s total revenue reached US$680.98 billion, a year-on-year increase of 5.1%, of which the US business contributed US$464.2 billion (68%). Even in the midst of macroeconomic fluctuations, the company maintained steady growth, with revenue growth rate of 6.03% in 2024, showing its anti-cyclical ability. It is expected that the revenue growth rate in fiscal 2026 will remain at 3-4%.

2.  Profit improvement and cash flow
   
   Net profit in fiscal year 2025 increased by 25.3% year-on-year to US$19.43 billion, but net profit fell slightly by 4.4% in the fourth quarter due to factors such as the acquisition of Vizio. The company improves efficiency through supply chain automation and inventory management optimization (stock turnover days dropped from 43 days to 38 days), with a compound annual growth rate of operating cash flow (CAGR) of 15%, supporting stable dividend payments and stock repurchases.

3.  E-commerce explosive growth
   
   Global e-commerce sales grew by 16%, online grocery delivery in the U.S. market grew by nearly 50%, and third-party seller services drove advertising revenue to grow by 28%. The Walmart+ membership program (including free delivery and fuel discounts) has enhanced user stickiness, and the e-commerce penetration rate has increased from 2% in 2018 to 16% in 2024.

 2. Market leadership and industry moat

1.  Global retail overlord
   
   Walmart accounts for 67.2% of the global retail market share, far surpassing second place Costco (15.9%). In the U.S., it has a market share of 24%, four times that of Amazon (6%), the second largest retailer.

   

2.  Supply Chain and Cost Control

   • Economy of scale: The “daily low price” (EDLP) is achieved through global procurement and supplier negotiations, and the gross profit margin is stable at around 24%.
   • Technology-driven: RFID, automated warehouses and AI prediction systems reduce logistics costs, distribution centers cover 70% of American households, and support drone delivery.
   • Omni-channel integration: 10,750 stores are used as online order fulfillment nodes to realize the “online order + offline self-pickup” model to reduce the cost of the last mile.

3.  Diversified business layout

   • Sam’s Membership Store: Membership revenue increased by 17.5%, and the high net worth customer base contributed high profit margins.
   • Emerging areas: advertising, financial services (such as digital payment PhonePe) and healthcare services expand revenue sources, with advertising revenue growing at 28%.

 3. Strategic advantages and future growth points

1.  Anti-inflation properties
   
   During the recession, consumers tend toward low-priced goods, and Walmart’s necessities (foods, medicines) account for more than 50%, and the demand is significantly rigid. During the period of high inflation in 2023, its U.S. same-store sales still increased by 5.3%.

2.  International expansion potential
   
   The international business covers 19 countries, with sales reaching US$121.9 billion in fiscal year 2025. China Sam’s membership store achieved double-digit growth, and the penetration rate of emerging markets such as Mexico and India increased.

3.  Technological innovation investment
   
   In 2025, capital expenditure will focus on supply chain automation, AI-driven inventory management and data platforms, and it is expected to improve labor efficiency by 20%. Acquisition of Vizio strengthens its smart TV advertising business and expands its streaming media portal.

 4. Shareholder returns and dividend attraction

1.  Long-term dividend growth
   
   Dividends have been increased for 52 consecutive years, with a dividend of US$0.83 per share in 2024, with a dividend ratio of 43.23%, and a dividend yield of 0.87%. Although dividend growth has slowed down in recent years (5-year CAGR -17.1%), low debt ratio (debt/EBITDA=1.5x) and cash flow stability support long-term dividend payout capabilities.

2.  Stock buyback plan
   
   It is planned to repurchase US$20 billion in stocks from 2023 to 2025 to increase earnings per share (EPS). Adjusted EPS is expected to grow by 8% in 2025.

 V. Risks and Challenges

1.  Supply Chain Vulnerability
   
   Relying on global procurement, geopolitical (such as trade frictions) and natural disasters may lead to the risk of chain breakage, the 2024 Baltimore bridge collapse incident briefly affected logistics.

2.  Labor cost pressure
   
   The U.S. minimum wage increase and unionization movement may drive up operating costs, with an annual employee turnover rate of about 70%.

3.  Intensifying competition
   
   Amazon’s continued expansion in the e-commerce field (38% market share in the United States), as well as the challenges of its membership and low-price strategies for rivals such as Costco and Aldi.

4.  Regulatory and ESG risks
   
   Antitrust reviews, data privacy regulations (such as GDPR) and carbon emission targets (which need to be carbon neutral by 2040) increase compliance costs.

 6. Conclusion: Investment logic

 Walmart is the benchmark for defensive investment:

• Economic downturn period: Resilience of essential goods consumption + low-price strategy to consolidate market share.
•  Long-term growth period: high-profit businesses such as e-commerce and advertising drive structural upgrades.
•  Stable earnings: Continuous dividend growth + buyback program provides dual returns.

Despite the competitive and cost pressures, its scale advantages, omni-channel integration and technology investment have built a moat that is difficult to replicate. According to the forecasts of DBS and KGI, the target price is US$102-175, corresponding to a price-to-earnings ratio of 35 times. It is recommended to balance portfolio risks as the core position.