Investment Thesis
Walmart demonstrates solid operational fundamentals with strong profitability metrics (ROE of 22%, ROA of 7.7%) and robust cash generation ($14.9B free cash flow). However, revenue growth is sluggish at 1.0% YoY and net income declined 1.7% YoY, indicating margin compression despite operational leverage in a mature retail environment.
Strengths
- Exceptional return on equity (22.0%) and return on assets (7.7%) demonstrate efficient capital deployment
- Strong interest coverage ratio (12.9x) and moderate debt/equity (0.38x) indicate conservative leverage and financial stability
- Substantial free cash flow generation ($14.9B) provides flexibility for capital allocation, shareholder returns, and strategic investments
- High insider activity (68 Form 4 filings in 90 days) suggests management confidence in business fundamentals
Risks
- Anemic revenue growth (1.0% YoY) in a large mature business limits expansion opportunities and suggests saturated domestic market
- Net income declined 1.7% YoY despite revenue growth, indicating margin pressure from input costs or competitive pricing dynamics
- Weak liquidity position (current ratio 0.79x, quick ratio 0.24x) is concerning for a retail business and could constrain operational flexibility during disruptions
- Low FCF margin (2.1%) relative to revenue suggests capital intensity and limited cash conversion efficiency
Key Metrics to Watch
- Revenue growth trajectory and same-store sales trends to assess market share and demand conditions
- Operating margin expansion/compression as indicator of cost management and pricing power
- Free cash flow generation and conversion ratio to track capital efficiency and sustainability of returns
- Current ratio and working capital management to ensure adequate liquidity for operations
Financial Metrics
Revenue
713.2B
Net Income
21.9B
EPS (Diluted)
$2.73
Free Cash Flow
14.9B
Total Assets
284.7B
Cash
10.7B
Profitability Ratios
Gross Margin
N/A
Operating Margin
4.2%
Net Margin
3.1%
ROE
22.0%
ROA
7.7%
FCF Margin
2.1%
Balance Sheet & Liquidity
Current Ratio
0.79x
Quick Ratio
0.24x
Debt/Equity
0.38x
Debt/Assets
0.0%
Interest Coverage
12.87x
Long-term Debt
38.2B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-03-19T19:59:35.097538 |
Data as of: 2026-01-31 |
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