# Walmart Inc. (WMT) — InvestMoat Analysis

_Last analyzed: September 19, 2026_
_Asset class: equity · Canonical page: https://investmoat.com/stocks/walmart_

## Scores

| Dimension | Score (0–100) |
| --- | --- |
| Moat durability | 74 |
| Growth trajectory | 68 |
| Valuation | 71 |
| **Composite** | **71** |

Scores are computed deterministically from this asset’s data by the InvestMoat formula (see https://investmoat.com/llms.txt for methodology). Scores are not directly comparable across asset classes.

## Key stats

- **Ticker:** WMT
- **Market Cap:** ~$850B

## Moat

A scale-and-last-mile cost machine: 280 million weekly customers across 10,900+ stores, buying power that funds everyday low prices, and a store network that now fulfills e-commerce in hours.

### The Everyday-Low-Cost Flywheel

Walmart runs a **scale-funded price and proximity machine** that Amazon cannot copy with warehouses alone and that Costco does not open to non-members:

- **Buying Power at Grocery Scale:** FY2026 revenue was $713.2B. Q2 FY2027 added $187.9B more (+5.9% YoY, +5.1% constant currency). That volume still buys the lowest landed cost in U.S. grocery and general merchandise, which is what lets Walmart put tariff refunds back into price rather than pocketing them. No regional grocer, and no warehouse club that requires a paid card at the door, matches this traffic base.
- **Stores as the Last Mile:** Global e-commerce grew 23% in Q2 and is now 24% of net sales. Walmart U.S. e-commerce grew 24%, store-fulfilled delivery ~43%, and expedited deliveries under three hours were ~37% of store-fulfilled orders. The 10,900-store grid is the fulfillment network. Amazon is still building grocery proximity; Walmart already has it, and 3,100 U.S. stores now sit on automated freight with more than half of e-commerce volume running through automated facilities.
- **High-Margin Overlay on the Same Trips:** Advertising, marketplace, and membership sit on top of the same weekly baskets. Global advertising grew 38% in Q2 (Walmart Connect +43% excluding VIZIO) off a FY2026 base of nearly $6.4B. Marketplace sales grew 52%. Global membership fee revenue grew 17%, with a record Q2 for Walmart+ net adds; Sam's Club membership fees grew 6%. These lines are still a rounding error on $700B+ of sales and a much larger share of profit — that is the mix shift the multiple is paying for.
- **Share Gains Across Income Tiers:** Walmart U.S. comps were +2.6% ex-fuel in Q2, led by transactions (+1.5%) and units, with an 80 bp health-and-wellness headline drag and a 125 bp pharmacy headwind from maximum-fair-price regulation. Management says core merchandise has been a 3–4% comp for two and a half years, and share gains continue across categories and income tiers, led by upper-income households. The flywheel is still taking customers from higher-priced banners; it is not only a low-income defensive.

**Moat verdict:** Walmart is a net AI beneficiary in operations and a net AI-resilient franchise in structure. The moat that matters is physical: supplier-funded prices and a store grid that now fulfills in hours. Advertising and marketplace ride that traffic; they do not replace it. AI weakens the app-and-recommendation surface — agents will shop around — and does not replicate 10,900 stores or $700B of buying power. The live risk is not disruption of the moat. It is paying mid-30s earnings multiple for a 5% sales compounder if the high-margin overlay slows.

## Growth

Q2 FY2027 (reported August 20) printed $187.9B of revenue, +5.9% YoY and +5.1% in constant currency, and management raised FY2027 sales growth to +4.0–5.0% cc and adjusted operating income to +7.0–8.5% cc. The growth that matters is the mix: global e-commerce +23% and now 24% of net sales, advertising +38%, membership fees +17%. U.S. comps of +2.6% look slow until the 125 bp pharmacy-MFP drag is stripped off; core merchandise is still a 3–4% compounder. Adjusted EPS guided to $2.80–$2.87 from FY2026's $2.64. Capex stepped up to ~4% of sales, which is why H1 free cash flow fell $1.4B to $5.5B even as operating cash flow rose $1.4B to $19.7B.

- **Revenue CAGR estimate:** 5-8%
- **Primary type:** both
- **Margin trend:** expanding
- **Key risk (moderate):** If Walmart U.S. core merchandise comps break below 3% for two consecutive quarters in FY2028 while global advertising decelerates below 20%, the mix-shift that supports a mid-30s earnings multiple is not happening fast enough and the stock re-rates toward a high-20s staple multiple.
- **Drivers:**
  - Global eCommerce — +23% YoY in Q2 FY2027, 24% of net sales; Walmart U.S. +24% with marketplace +52% and store-fulfilled delivery ~43% (accelerating)
  - Global Advertising — +38% YoY in Q2; Walmart Connect +43% ex-VIZIO; FY2026 global advertising nearly $6.4B (+46%) (accelerating)
  - Membership Fee Revenue — +17% globally in Q2; Sam's Club U.S. membership fees +6%; record Q2 Walmart+ net adds (stable)
- **Score derivation:** Base 66.3 (5-8% blended CAGR, midpoint 6.5%) + 2.7 trajectory (e-commerce and advertising accelerating; membership stable) + 4 expanding margins − 5 moderate key risk = 68

## Valuation

At $106.73 (September 18 close) Walmart sits about 7% below the $115 base case and 37% above the $78 bear. The stock has come in from a $135.16 52-week high, but it still trades at ~37× FY2027 guided EPS ($2.80–$2.87) and ~39× trailing GAAP ($2.76). That is a quality-retailer multiple, not a discount-store multiple. Modest upside if the ads/membership mix keeps lifting earnings faster than sales; limited margin of safety if comps stall.

**Fair value:** $115 — Fair value of $115 assumes FY2028 EPS around $3.15–$3.25 (high-single-digit compounding off the $2.80–$2.87 FY2027 guide) and a mid-30s multiple that the market already pays for Costco-like quality without Costco's 10% sales growth. The bull case needs advertising and membership to keep compounding at 20%+ and the multiple to hold near 40×. The bear case is a consumer recession plus pharmacy drag that leaves the stock at ~26–28× trough earnings.

| Multiple | Value | Note |
| --- | --- | --- |
| Trailing P/E (GAAP) | ~39× | $2.76 TTM EPS |
| Forward P/E (FY2027E) | ~37× | guided adj. EPS $2.80–$2.87 |
| PEG Ratio | ~4× | fwd P/E ÷ ~8–10% EPS CAGR |
| Price / Sales (NTM) | ~1.15× | ~$850B / ~$740B NTM sales |
| Price / FCF | ~55–70× | FY2026 FCF $14.9B; H1 $5.5B |

At ~37× FY2027 guided earnings Walmart is expensive versus Target (~16×) and the discount-store median (~21×), and only a modest discount to Costco's low-40s forward multiple. The PEG around 4× says the market is paying for mix, not for 5% sales growth. Trailing GAAP (~39× on $2.76) and forward (~37×) are close — there is no earnings ramp hiding in the multiple. Free cash flow is the soft spot: capex stepped to ~4% of sales, H1 FCF fell to $5.5B, and P/FCF in the 55–70× range is a growth-stock print on a staple cash-flow profile. _(as of September 19, 2026 (Q2 FY2027 print; price $106.73))_

## Price scenarios

### Bear — $78

A softer consumer plus a sticky pharmacy-MFP drag leaves U.S. comps in the low-2s, advertising decelerates into the teens, and the mid-30s multiple compresses toward a high-20s staple rating.

- Walmart U.S. comps including health and wellness stay at ~2.6% or worse for two consecutive quarters in FY2028 as the 125 bp maximum-fair-price pharmacy headwind persists and core merchandise breaks below 3%
- Global advertising growth decelerates below 20% as retail-media inventory at Amazon, Kroger, and Target catches up, so the mix shift no longer lifts operating income faster than sales
- Tariff-refund gross-margin help from Q2 rolls off while price investments continue, and FY2028 adjusted operating-income growth misses the 7% handle
- The multiple compresses toward ~26–28× on ~$2.80 of earnings — still a premium to Target, no longer a Costco-quality print

### Base — $115

Mid-single-digit sales, high-single-digit earnings, and a stable mid-30s multiple as e-commerce, advertising, and membership keep taking mix.

- FY2027 lands inside the raised 4.0–5.0% cc sales and 7.0–8.5% cc adjusted operating-income guides, with adjusted EPS at or above the $2.80–$2.87 range
- Global e-commerce holds a 20%+ rate and mix moves toward the high-20s of sales as store-fulfilled delivery and marketplace stay the contribution to the U.S. comp
- Advertising and membership continue to grow faster than the banner, keeping consolidated operating margin expanding even as capex runs near 4% of sales
- FY2028 EPS compounds into the low-$3s and the stock holds ~35–36×, which is $110–$115 without a re-rating

### Bull — $145

Retail media and paid membership become a visible profit engine, e-commerce mix clears 30%, and the multiple holds near 40× on faster earnings.

- Global advertising compounds at 25%+ off the ~$6.4B FY2026 base and, with membership, becomes a disclosed third of operating profit rather than a mix comment
- E-commerce mix clears 30% of net sales with marketplace and sub-three-hour delivery still taking share from Amazon grocery in upper-income households
- International holds high-single-digit constant-currency growth after the Flipkart calendar noise, with China and Flipkart ads still the accelerant
- FY2028–29 EPS moves toward $3.50+ and the stock re-rates toward ~40×, putting $140–$145 in range without needing Costco's warehouse math

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