Walmart’s most compelling thesis for buying revolves around its highly profitable business-mix shift and its capture of more affluent demographics. Historically viewed as a low-margin grocery and brick-and-mortar operation, the company is successfully building a high-margin digital ecosystem.
By growing its global advertising arm by 37.0% and scaling its third-party digital marketplace, the company’s creating high-margin revenue streams that flow directly to operating income. This allows the firm to comfortably absorb rising distribution and fuel costs while keeping its grocery prices lower than competitors, widening its competitive moat.
The company has also become the preferred destination for higher-income households adjusting to persistent macro pressures. Wealthier shoppers are increasingly utilizing it for convenience-driven store-fulfilled delivery, which has more than doubled over the last two years. This demographic shift significantly increases the average transaction size (“ticket”) and expands the company’s long-term wallet share.
WALMART INC. (Nasdaq symbol WMT; www.walmart.com) is your #1 Conservative Buy for 2026 and the world’s largest retailer, operating 10,974 outlets (as of April 30, 2026) across 19 countries and serving about 270 million customers each week.
Walmart continues to expand its advertising business, which consists of electronic display ads in its stores as well as its ecommerce platforms.
As part of that strategy, in December 2024, Walmart paid $1.9 billion for Vizio Holding Corp (New York symbol VZIO), a maker of TV sets and soundbars. The purchase also gave the company full control over Vizio’s Smart-Cast Operating System, which streams ad supported content on its devices.
Walmart is now paying an undisclosed amount for Vibe.co, which operates a platform that lets advertisers buy and create digital ads. That should help the company draw more small and medium-sized businesses to its advertising platforms, particularly as smaller firms usually can’t afford to buy.
[ofie_ad]
Walmart’s sales and earnings continue to power upward
The company reported stronger-than-expected sales for its latest quarter. However, its full-year earnings forecast fell short of the consensus outlook. That’s due to concerns that rising gasoline prices hurt consumer spending as well as increase its transportation costs.
In the fiscal 2027 first quarter, ended April 30, 2026, sales rose 7.3%, to $177.75 billion from $165.61 billion a year earlier. That topped the consensus forecast of $174.98 billion.
Walmart’s U.S. same-store sales (including online) rose 4.1%. That was due to a higher number of transactions (up 3.0%) and higher spending per transaction (up 1.1%). The company also continues to see stronger demand at its online division—e-commerce sales in the quarter improved 26%. As well, revenue from selling ads (both in-store and online platforms) jumped 37%.
If you factor out gains and losses on investments and other unusual items, earnings per share rose 8.2%, to $0.66 from $0.61. That matched the consensus estimate.
Despite the impact of rising gasoline prices, Walmart still expects its sales (excluding businesses it recently sold and currency rate fluctuations) for all fiscal 2027 will rise 3.5% to 4.5%.
Even though higher fuel prices will also raise the company’s costs, it stands by its full-year earnings forecast of between $2.75 and $2.85 a share. However, the midpoint of that range—$2.80—range is below the consensus estimate of $2.91.
The stock trades at 39.9 times the company’s earnings estimate. While that’s a high multiple, it’s still an acceptable p/e considering Walmart’s dominant market share and fast-growing online and advertising businesses.
Walmart also raised your quarterly dividend by 5.3% with the April 2026 payment, to $0.2475 a share from $0.235. The new annual rate of $0.99 yields 0.9%.
Recommendation in Wall Street Stock Forecaster: Walmart Inc. is a buy.
