Grant's is bearish on Walmart

A quarter-century ago, Walmart could almost be said to deserve the valuation that Mr. Market is assigning it today.  In the high-cotton fiscal year ended Jan. 31, 2000, the retailer expanded its top line by 20% and earnings per share by 26% in the context of 8% same-store sales growth and 11% store-base growth.  A growth stock, WMT might have been mistaken for a bubble stock...  At a then peak split-adjusted price of $23.15 on Dec. 27, 1999, Walmart commanded a 57.9 times trailing earnings multiple.

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[Today] Wall Street is virtually 100% bullish on the shares (out of 45 recorded analyst opinions, there's just one "sell")...  Certainly, the good news has registered on the share price.  Up 51.7% in the year to date, WMT trades at 33.5 times trailing earnings, a generational high.  "To meet expectations," [Evan] Lorenz observes, "management must somehow compound EPS growth at an 11.1% rate between fiscal 2025 and 2028, an acceleration from 9.8% posted in the second quarter this year."

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No need to preach to the choir of the Walmart insider: Since the start of the year, top executives and the Walton family have sold a whopping 63.9 million shares for proceeds of $4.2 billion.  Save money, live better - as they perhaps understand as well as anyone.

~ Grant's Interest Rate Observer, "Tale of two decades," October 11, 2024