Walmart Inc. (WMT) reported record revenue of $680.985 billion for fiscal year 2025, driven by a 20% surge in e-commerce sales. However, the company issued a cautious outlook for fiscal year 2026, forecasting slower sales growth of 3%-4% and lower-than-expected earnings per share. This conservative projection, influenced by potential tariffs and economic uncertainty, led to an 8% drop in Walmart’s stock—the largest single-day decline in nearly three years. While some analysts remain bullish on Walmart’s long-term profitability due to its strong digital presence and Walmart+ membership growth, others warn that its high valuation may limit future gains.
Walmart’s Fiscal Year 2025 Performance
In the fiscal year ending January 31, 2025, Walmart reported a total revenue of $680.985 billion, surpassing its previous records. This achievement was largely driven by a 20% surge in e-commerce sales, reflecting the company’s successful digital transformation efforts. The operating income for this period stood at $7.9 billion, aligning with Wall Street’s high expectations. Walmart’s ability to attract a diverse customer base, including higher-income households seeking value, has been pivotal in this growth.
Conservative Outlook for Fiscal Year 2026
Despite the robust performance in 2025, Walmart has issued a cautious forecast for fiscal year 2026. The company anticipates a net sales growth of 3% to 4% and adjusted earnings per share (EPS) ranging from $2.50 to $2.60. These projections fall short of analysts’ expectations, which had estimated a 4% sales growth and EPS of $2.77. This conservative outlook has been attributed to potential challenges such as additional tariffs on imports from China, Mexico, and Canada, as well as concerns over consumer spending amid ongoing inflationary pressures.
Market Reaction and Stock Performance
Following the announcement of the fiscal 2026 forecast, Walmart’s stock experienced a significant decline. Shares fell by approximately 8% in premarket trading, marking the company’s most substantial single-day drop in nearly three years. This downturn reflects investor concerns regarding the company’s future profitability and the broader economic environment.
Analyst Perspectives
Financial analysts have offered varied perspectives on Walmart’s position. Morgan Stanley analysts have set
a bullish target, projecting that Walmart’s stock could reach $150, driven by strong profit margins and investments in
technology to enhance e-commerce efficiency. They highlight the growth of Walmart’s membership program, Walmart+, and
the potential for increased profits through data insights from e-commerce activities.
Conversely, other analysts urge
caution, noting that Walmart’s shares are trading near a 20-year high, which may limit potential for further significant gains.
The company’s elevated valuation suggests that investors may be paying a premium for its earnings, raising questions about future
stock performance amid economic uncertainties.
Conclusion
Walmart’s recent financial performance underscores its resilience and adaptability in a dynamic retail landscape. While the company has achieved record revenues and demonstrated strong growth in its digital sectors, its conservative outlook for the upcoming fiscal year has introduced caution among investors. As Walmart navigates potential economic headwinds, its strategic investments and market positioning will be critical in shaping its future stock performance.