Market has shifted to favor more traditional businesses including Walmart (also read Old economy is new and new economy is old).
Walmart stock is up more than 20% since Q4 2025, while Nasdaq index has returned LST.
In the most recent earnings, Walmart gave FY2027 outlook which is considered as conservative – adj. EPS $2.75 to $2.85 is below consensus of $2.96.
Here I revisited the guidance vs result in the past few years, using the annual guidance issued at 4q specifically.
Meanwhile, two other stories are underpinning the Walmart story.
1/ Higher margin and technology-driven business is growing fast, including ads, memberships, 3rd-party listings. Previous years’ investment entering “return” phase and capex, guided at 3.5% of net sales, is expected to peak this year.
2/ K-shape economy and tariffs are pushing more consumers to Walmart. High-income US consumers to “trade down” while Walmart is also the safety net for the “Downward Arm”.