Intrinsic Value Walmart Inc. (WMT.DE)

• Previous Close: €99.16
• Intrinsic Value: €32.96
• Upside potential: -67%

Stock Valuation Context

Business Model And Market Position

Walmart Inc. is a global retail giant operating across three key segments: Walmart U.S., Walmart International, and Sam's Club. The company's diversified retail footprint spans supercenters, supermarkets, hypermarkets, warehouse clubs, and e-commerce platforms, serving customers in 24 countries under 46 banners. Walmart's core revenue model hinges on high-volume, low-margin sales of groceries, consumables, and general merchandise, complemented by ancillary services like fuel stations, financial services, and health and wellness offerings. Its omnichannel strategy integrates physical stores with digital platforms such as walmart.com and Flipkart, reinforcing its dominance in the discount retail sector. Walmart's scale and supply chain efficiency enable competitive pricing, making it a leader in the consumer defensive space. The company's market position is further strengthened by its ability to adapt to regional preferences while maintaining cost leadership, ensuring resilience against economic downturns and competitive pressures.

Revenue Profitability And Efficiency

Walmart reported revenue of €680.99 billion for FY 2025, underscoring its massive scale in the global retail market. Net income stood at €19.44 billion, with diluted EPS of €2.41, reflecting steady profitability despite thin margins typical of the discount retail industry. Operating cash flow was robust at €36.44 billion, though capital expenditures of €23.78 billion highlight ongoing investments in store upgrades and e-commerce capabilities.

Earnings Power And Capital Efficiency

The company's earnings power is driven by its ability to leverage economies of scale, with operating cash flow significantly exceeding net income. Walmart's capital efficiency is evident in its disciplined reinvestment strategy, balancing store expansions, technology upgrades, and shareholder returns. The firm's low beta of 0.699 suggests stable earnings relative to market volatility, a hallmark of its defensive sector positioning.

Balance Sheet And Financial Health

Walmart maintains a solid balance sheet with €9.04 billion in cash and equivalents, though total debt of €62.11 billion reflects its leveraged growth strategy. The company's financial health is supported by strong cash flow generation, enabling it to service debt while funding operations and strategic initiatives. Its liquidity position remains adequate to navigate cyclical retail demands.

Growth Trends And Dividend Policy

Walmart's growth is anchored in omnichannel expansion, particularly in e-commerce and international markets. The company paid a dividend of €0.57 per share, signaling a commitment to returning capital to shareholders despite its reinvestment focus. Its scale and diversification provide a stable platform for incremental growth, though revenue expansion is tempered by market saturation in mature regions.

Valuation And Market Expectations

With a market capitalization of €676.80 billion, Walmart trades at a premium reflective of its defensive qualities and market leadership. Investors likely price in modest growth expectations, prioritizing stability and cash flow over high earnings expansion. The stock's low beta aligns with its role as a portfolio stabilizer in volatile markets.

Strategic Advantages And Outlook

Walmart's strategic advantages include unparalleled scale, supply chain mastery, and a growing digital footprint. The outlook remains positive, with opportunities in private-label expansion, automation, and international markets offsetting margin pressures. Its ability to adapt to consumer trends and economic shifts positions it for sustained, if unspectacular, long-term growth.

Sources

Company filings, Bloomberg