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Walmart Inc WMT

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Walmart’s Second Quarter Suggests Continued Strength Despite Normalization; Shares Rich

Zain Akbari, CFA Equity Analyst

Analyst Note

| Zain Akbari, CFA |

Wide-moat Walmart saw strong second-quarter results despite comparisons to last year’s pandemic-sparked sales surge (5.2% comparable growth for U.S. namesake stores, 14.5% two-year stack). While Walmart beat our expectations, we attribute the outperformance to pandemic-related volatility, so our long-term targets of low-single-digit percentage top-line growth and mid-single-digit adjusted operating margins are intact. With only a mid-single-digit percentage increase planned for our $132 fair value estimate, we suggest investors seek a more attractive entry point.

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Company Profile

Business Description

America’s largest retailer by sales, Walmart operated over 11,400 stores under 54 banners at the end of fiscal 2021, selling a variety of general merchandise and grocery items. Its home market accounted for 78% of sales in fiscal 2021, with Mexico and Central America (6%) and Canada (4%) its largest external markets. In the United States, around 56% of sales come from grocery, 32% from general merchandise, and 10% from health and wellness items. The company operates several e-commerce properties apart from its eponymous site, including Flipkart and (it also owns a roughly 10% stake in Chinese online retailer Combined, e-commerce accounted for about 12% of fiscal 2021 sales.

702 Southwest 8th Street
Bentonville, AR, 72716
T +1 479 273-4000
Sector Consumer Defensive
Industry Discount Stores
Most Recent Earnings Jul 31, 2021
Fiscal Year End Jan 31, 2020
Stock Type Classic Growth
Employees 2,300,000