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Walmart Inc WMT

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Morningstar’s Analysis

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PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Walmart's Better-Than-Expected Start to Fiscal 2022 Will Lift Our Near-Term Outlook; Shares Rich

Zain Akbari, CFA Equity Analyst

Analyst Note

| Zain Akbari, CFA |

Despite increasingly difficult comparisons, wide-moat Walmart saw strong fiscal 2022 first-quarter performance, with 3% revenue expansion spurred by growth in all channels and rising general merchandise sales. This should lead us to lift our near-term targets and our $124 fair value estimate by a mid-single-digit percentage. We attribute the results to transitory pandemic-related volatility and still expect low-single-digit sales growth and 4%-5% adjusted operating margins long-term. We suggest investors await a more attractive entry point, considering near-term volatility and intensifying competition.

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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 shoes.com (it also owns a roughly 10% stake in Chinese online retailer JD.com). Combined, e-commerce accounted for about 12% of fiscal 2021 sales.

Contact
702 Southwest 8th Street
Bentonville, AR, 72716
T +1 479 273-4000
Sector Consumer Defensive
Industry Discount Stores
Most Recent Earnings Apr 30, 2021
Fiscal Year End Jan 31, 2020
Stock Type Classic Growth
Employees 2,300,000

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