Is it to late to invest in the 800-pound gorilla of the retail sector?
Walmart Stock is like a heavyweight champ in the retail ring, throwin' punches globally. With a whopping 10,500 stores and a bunch of online shops spread across 19 countries, it's been dodgin' the hits that took down other big-name retailers during the retail apocalypse.
Check this out – from 2019 to 2024, which just wrapped up in January, Walmart's yearly cash flow went up by 5% each year, and its earnings per share (EPS) shot up at a crazy 21% rate. Talk about steady growth, right? And get this, they pulled it off even when the pandemic, supply chain issues, and inflation were throwin' curveballs at the entire retail scene. Walmart Stock ain't just surviving; it's thriving.
Walmart's stock went on a wild ride, surging up by a whopping 85% in the last five years. When you factor in the reinvested dividends, the total return shoots up to a solid 101%. Now, the million-dollar question: does this retail giant still have some gas left in the tank? Let's break it down and see if you should be hitching a ride on this stock, selling your tickets, or just kicking back and holding on.
The reasons to buy or hold Walmart Stock
Walmart's got some serious street cred among the bulls, mainly because it's one of the rare brick-and-mortar warriors that managed to keep pace with the Amazon juggernaut and other e-commerce heavyweights. They pulled it off by beefing up their online game, using their physical stores to handle the online hustle, and going toe-to-toe with Amazon on prices.
In the battle against Amazon Prime, Walmart didn't just sit back. They bulked up their own subscription plan, Walmart+, offering free deliveries, discounts, and even throwing in a subscription to Paramount+ for good measure. Now, they're eyeing a strategic move by snagging Vizio, a smart TV maker. It's like they're gearing up for a showdown with Amazon's Fire TV and smart TVs.
Walmart's also not slouching in the global arena. They're flexing their muscles with Sam's Club, keeping pace with Costco in the warehouse club game. Plus, they went big with acquisitions, scoring Flipkart in India and grabbing a slice of the action in China with JD.com. Take notes, Target – Walmart's playing the global game, while you're stuck stateside.
Now, let's talk numbers. In fiscal 2024, Walmart's revenue shot up by 6%, thanks to a solid 5.6% jump in comparable-store sales in the U.S. and a whopping 13.5% boost in international sales. Compare that to Target, dealing with a 3.7% drop in comps – their first annual decline in seven years. Ouch.
Looking ahead, analysts are throwing some optimistic numbers around. From 2024 to 2026, they're betting on a 4% annual revenue growth and a mind-blowing 35% growth in earnings per share (EPS). Even with the stock trading at 26 times forward earnings, it's not scaring off investors. The dividend's holding strong with a decent 1.4% yield, and management's been dishing out annual raises for 51 years straight. Plus, they've been on a shopping spree, buying back nearly 40% of their shares over the past two decades. Walmart's not just in the game – they're playing it smart.
The reasons to sell Walmart Stock
But hold your horses, because the bears are putting on the brakes for Walmart. They're waving the red flag, shouting that this stock is hitting historic highs in the pricey department. Back in the 2010s, Walmart was cruising at less than 20 times earnings, and now, it's flexing muscles pricier than most of its industry buddies. Take Target, for instance – it's kicking it at just 18 times forward earnings, leaving Walmart in the dust.
And here's the scoop on insider trading – the insiders at Walmart Stock aren't exactly throwing a party for the stock. In the last year, they unloaded a whopping 86 times more shares than they bought. Not to mention, in the past three months, it's been a selling spree with insiders ditching 64 times more shares than they snagged. That's some cold insider vibes, hinting that maybe the stock's running faster than its growth.
Now, let's talk China. Walmart's got a serious crush on the Middle Kingdom, with almost 400 brick-and-mortar spots and a bunch of online platforms. Trouble is, they're hitched to Chinese suppliers for those sweet, cheap products. Throw in some trade restrictions and tariffs against China, and suddenly, Walmart's overseas love affair could hit a major roadblock, putting a squeeze on those gross margins.
Last but not least, Walmart's going all-in against Amazon with its e-commerce, delivery, and digital media game. But here's the twist – Amazon's got a secret weapon called Amazon Web Services, a high-margin cash cow that's keeping the retail and media show running. Walmart Stock? Not so much. And that could mean a rough ride, with potential hits to those operating margins. The bears are growling, and they've got their reasons.
Its strengths still outweigh its weaknesses
Walmart Stock might face some unpredictable challenges over the next few years, but its scale, diversification, and forward-thinking strategies should help it weather the macro and competitive headwinds. Those strengths — along with its reputation as a safe-haven investment — make it a great stock for long-term investors to buy, hold, and forget.
Should you invest $1,000 in Walmart Stock right now?
Hey, before you dive into Walmart stocks, here's some food for thought. The Motley Fool Stock Advisor crew recently unveiled their top 10 picks for investors, and surprise, surprise – Walmart Stock didn't make the cut. These chosen 10 are apparently the ones set to unleash monster returns in the years to come.
Let's throw it back a bit. Remember Nvidia? Back in the day, on April 15, 2005, it earned its spot on this list. Now, imagine if you threw $1,000 into Nvidia at the time of the recommendation – you'd be staring at a sweet $536,289 right now. Yeah, you heard that right. So, it might be worth peeking at what these Stock Advisor whizzes are cooking up before placing your bets on Walmart Stock.