Walmart Stock Analysis: Is the $916 Billion Low-Margin Retail Giant Worth Buying Now?

🛒 Walmart: A Basic Business at Its Core

There's a reason I like talking about Walmart. It's a basic business. Over the next few years, Walmart is expected to grow thanks to its booming online sales, powerful advertising business, and smart use of AI and automation to cut costs and boost profits.

Walmart is becoming more than just a retailer. It's turning into a tech-powered machine that can compete with Amazon while serving customers across all income levels.

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📊 Let's Look at the Key Numbers

Metric	Value
Stock Price	$114
Market Cap	$916 billion
Enterprise Value	$1.09 trillion
Free Cash Flow (Last Year)	$15 billion
Net Income	$23 billion
P/E Ratio	40x

The $114 stock price? That's useless right now. What we care about is the market cap—all shares outstanding multiplied by the share price, $916 billion.

The difference between enterprise value and market cap, about $170 billion, is debt. Since they're retail with lots of leases, this is expected.

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💰 The Gap Between Cash Flow and Net Income

Last year's free cash flow of $15 billion vs. net income of $23 billion—I don't love that difference. But comparing 5-year averages shows $15 billion vs. $13.8 billion, suggesting they've recently increased capital expenditures significantly to grow the business.

Five years ago, they were spending $10-13 billion on capex. Now they're spending $25 billion. That's why free cash flow is down. They also had a huge year in 2020 because of COVID.

So I look at this and think, "Okay, I'm not worried about it."

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😬 The Real Concern: Valuation

40 times earnings, folks. It's Walmart. Yeah, I know it's going to grow a lot, but it's 40 times earnings.

Look at the profit margin:

Period	Margin
10-year average	2.45%
5-year average	2.38%
1-year	3.26%

They make pennies on every dollar they sell. It's not a high-margin business. They could be getting into higher-margin areas, but 95-98% of revenue comes from retail. This thing isn't going to move much, in my opinion.

Return on invested capital is pretty stable at about 11%.

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📈 What Analysts Think

• 50% EPS growth over the next 5 years (about 10% annually)
• Revenue growth of 4-5% per year

Nothing to write home about, but that's not what matters. A great company growing like crazy—if you overpay for it, you're not going to do well. A boring company like this—if you pay the right price, you're going to do very well.

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🔢 Calculating Fair Price

Based on a 10-year analysis, here are my assumptions:

Assumption	Low	Mid	High
Revenue Growth	2.5%	3.5%	4.5%
Profit Margin	2%	2.5%	3%
FCF Margin	2.5%	3%	3.5%
P/E in 10 Years	17	20	23

The results?

Price Range	Amount
Low Price	$30-35
Mid Price	$40-50
High Price	$60-70

The stock is currently at $114, but my analysis shows fair value between $30-70.

Even if I bumped revenue growth to 3-5% and margin to 3-4%, the numbers don't change much.

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🎯 Conclusion: It's Just Overpriced

I look at this and say, "It's just overpriced," and that's okay. I'd rather wait until the stock is a lot lower and at the right price. That's what good, successful investing is all about.

Be patient. If valuation is our biggest worry, we just wait for the price to fall and fundamentals to improve. That's easy. We can do that all day.

Even a great company—if it's expensive, wait. That's the mindset of a true investor.