Walmart's Stock Rises 32% This Year, Earnings Miss Expectations

Walmart Inc. (WMT) is expected to experience minimal stock movement following its fiscal second-quarter results, which revealed revenue surpassing expectations but earnings slightly falling short. The company reported a steady growth trajectory in U.S. comparable sales, with increases of 7.4% in Q1’24, 6.4% in Q2’24, 4.9% in Q3’24, and 4.0% in Q4’24. Looking ahead, Walmart anticipates revenue growth for FY 2025 to exceed its guidance of 3% to 4% year-over-year, alongside adjusted earnings per share (EPS) projected at the higher end of its previous range. Despite a robust stock performance, with a 55% increase since early January 2021, Walmart's returns have lagged behind the S&P 500 in 2021 and 2023. The retailer's stock saw returns of 2% in 2021, 0% in 2022, and 13% in 2023, contrasting with the S&P 500's 27%, -19%, and 24% respectively. The Trefis High Quality Portfolio has consistently outperformed the S&P during this period, raising questions about Walmart's potential for future growth amid a challenging macroeconomic landscape marked by high oil prices and elevated interest rates. In Q1, Walmart's revenue rose 6% year-over-year to $161.5 billion, with same-store sales increasing nearly 4%. The company's global advertising business also saw significant growth, up approximately 24%. For Q2 2025, Walmart's EPS is expected to be $0.63, slightly below consensus estimates, while adjusted EPS for the latest quarter was reported at $0.60, reflecting a 24% year-over-year increase. Walmart's valuation suggests a price target of $67, aligning closely with its current market price.