Walmart

IThe business

Walmart is three companies under one name. Walmart U.S. runs 4,611 stores and sold $483.0B in fiscal 2026. Walmart International runs 5,743 stores in 18 countries, with Mexico and Central America, China, Canada and India the largest, and sold $130.4B. Sam’s Club U.S. runs 601 membership clubs and sold $93.0B.² Together that is $706.4B of net sales, $6.8B of membership and other income, and about 2.1 million associates, 1.6 million of them in the US.²

The idea is the one Sam Walton started with: put a very wide range of everyday goods in one building, buy them in enormous volume, and sell them at a low price every day instead of running sales. The company calls it everyday low prices, backed by everyday low cost.² What has changed is what sits on top. Walmart now says it serves about 280 million customers a week, and its online growth is led by store-fulfilled pickup and delivery: customers can collect or receive an order from over 8,400 locations, and Walmart says store delivery reaches 95% of US households in under three hours.²³

What it sells

Groceries are the base. Of Walmart U.S.’s $483.0B, $285.5B was grocery, $115.1B general merchandise, $69.5B health and wellness, which includes pharmacy, and $12.9B other.² Grocery is 59% of the US segment C (calculated).² At Sam’s Club, grocery is $64.7B of $93.0B, and fuel and other another $11.6B.² Grocery matters because people buy it every week. It is why a store that opens at a low margin still gets visited.

Pharmacy has been a quiet driver. Health and wellness sales in the US rose from $54.9B in fiscal 2024 to $69.5B in 2026, up 27% C (calculated).² Part of that was GLP-1 weight-loss drugs, which management says added about 100 basis points to Walmart U.S. comparable sales in each of fiscal 2025 and 2026, and about 50 in 2027.¹⁶ A new federal rule on maximum fair prices for some drugs, effective 1 January 2026, now works the other way. It cut Walmart U.S. comparable sales by about 125 basis points in the second quarter of fiscal 2027, because the same pill brings in less money.⁵¹⁶ Without health and wellness, second-quarter comparable sales were 3.4% instead of 2.6%.¹⁶

The online business is a store business

Global eCommerce sales were $150.4B in fiscal 2026, up 24% from $120.9B, and 21% of net sales C (calculated).² Walmart U.S. had $99.6B of it, International $35.8B and Sam’s Club $15.0B.² The company says growth is led by store-fulfilled pickup and delivery and by its marketplace, where outside sellers list goods and Walmart sells them fulfilment and advertising.⁴ In the second quarter of fiscal 2027 eCommerce grew 23% and was 24% of net sales.¹⁶

That matters for the economics. Walmart’s argument is that a package picked from the shelf of a store near the customer costs less to deliver than one shipped from a distant warehouse. It says the US eCommerce business is now improving its economics and that eCommerce losses abroad are shrinking.⁵ It does not disclose a profit figure for eCommerce, so I treat the claim as direction, not size.

Where the money comes from

Walmart U.S. earned $25.2B of the segment total of $32.7B in fiscal 2026, 77% C (calculated).² International earned $5.1B on a larger store count, and Sam’s Club $2.4B.² Corporate and support costs of about $2.9B come off that total to give the $29.8B of operating income C (calculated).² In February 2026 Walmart changed how it allocates some head-office cost to the segments. The change moved less than $0.1B between segments for fiscal 2026.³

Two lines sit outside the stores and are growing much faster than sales. Global advertising rose 46% to nearly $6.4B in fiscal 2026, including VIZIO, the television maker Walmart bought in December 2024 for about $1.9B net.⁴² Membership fee revenue was $4.4B, against $3.8B and $3.1B in the two years before.² In the second quarter of fiscal 2027 advertising grew 38% and membership fees 17%.⁵ Add the two and you get $10.8B, equal to 35% of the $31.0B of adjusted operating income C (calculated).⁴² That is revenue, not profit. Walmart does not say how much of it is profit, and part of advertising is booked as a reduction of cost of sales, not as revenue.⁴ Advertising needs little new capital, so I expect much of it to reach profit. I can’t measure how much, and I say so in the valuation.

Walmart International

The international segment is where Walmart has changed most. It sold Walmart Argentina in November 2020, and the United Kingdom (Asda) and Japan (Seiyu) businesses in the first quarter of fiscal 2022.¹² It bought a majority of Flipkart, the Indian eCommerce company, in August 2018 for $16B, $13.8B net of cash acquired.¹⁷ After those sales the international segment’s net sales fell from $121.4B in fiscal 2021 to $101.0B in 2022 C (calculated).¹¹ The segment worked in 23 countries in January 2022 and 18 in January 2026.¹²² Sales have since recovered to $130.4B.²

Three markets matter: Mexico and Central America at $52.5B of sales through Walmex, which is majority owned, China at $24.6B, up 23%, and Canada at $23.7B.² India is Flipkart and PhonePe, the payments app, both majority owned. In fiscal 2026 PhonePe changed its staff share awards ahead of a possible public offering, which cost $0.7B with no tax benefit, and the 10-K says another $3B of unrecognized subsidiary stock pay would be booked if an offering triggers vesting.² I read that as a cost that has not yet come due, and I don’t count an offering as a gain.

The chart shows what the segment story hides. Operating margin on total revenue was 4.7% in fiscal 2017 and 4.2% in 2026 C (calculated).¹⁴² Over nine years Walmart grew, built eCommerce, and bought and sold businesses, and ended below where it began. Gross margin on net sales fell from 24.9% to 24.2%, as grocery and pharmacy outgrew general merchandise and online and international sales grew. A lower cost rate, from 21.2% to 20.9% of net sales, paid back part of it C (calculated).¹⁴² In the last two years the pattern reversed: gross margin rose 0.5 points and expenses rose 0.6 C (calculated).¹⁰² Wages, healthcare, claims and depreciation grew faster than the gross profit on the extra sales. That is the main fact the bull case has to change.

Capital: from 2% to nearly 4% of revenue

The other thing that changed is what the business costs to run. In fiscal 2017 capital spending was $10.6B, 2.2% of revenue. In fiscal 2026 it was $26.6B, 3.7% C (calculated).¹⁴² Of the $26.6B, $16.5B went to supply chain, customer-facing initiatives and technology, $5.6B to remodelling stores and clubs, $1.4B to new stores and clubs in the US, and $3.2B to International.² Management guides to about 4.0% of net sales in fiscal 2027, which is about $29B to $30B, raised from 3.5% in May.⁵

The automation is real. About half of eCommerce fulfilment-centre volume is automated, about 60% of stores receive some automated freight, and 23 of 42 regional distribution centres are being retrofitted.³ The company expects the spending to lower its cost per package and per case, and says it expects return on capital to rise over time.² Depreciation has risen from $11.2B in fiscal 2021 to $14.2B in 2026, and will keep rising.² So the first question for any owner is not how fast Walmart grows. It is whether the extra $16B a year it spends compared with fiscal 2021 is paid back C (calculated).¹²²

IIThe moat

A durable advantage is a cost or a habit that a rival with money and talent can’t copy in a reasonable time. Walmart has more of them than most companies, and they are not equally strong. Its grip on the US customer is wide. Its position in India, China and Canada is not the same kind of thing.

The loop is simple. Low prices bring people into the store or onto the app. More people mean more volume, which gives Walmart a lower cost on each item it buys and each case it moves. The savings go back into price. Once the traffic is there it can also be sold: to advertisers who want to reach the shopper at the moment they buy, to sellers who want the shipping network, and to members who want delivery. Those extras do not need new customers, so their margin is high.

The test of any such advantage is whether it has widened or narrowed. Here is the evidence both ways.

Evidence it is widening

• Walmart U.S. comparable sales were 5.5%, 4.8% and 4.3% in fiscal 2024, 2025 and 2026, and in the last two years transactions grew.²
• Target’s net sales fell 1.7% in its last fiscal year, to $104.8B, while Walmart’s rose 4.7% C (calculated).¹⁸²
• Walmart says share gains continued across income tiers, led by upper-income households.¹⁶
• Walmart U.S. eCommerce went from $65.4B to $99.6B in two years, 52% more C (calculated).² The US operating margin rose from 5.0% to 5.2% while it did that.²
• The Walmart U.S. gross profit rate rose from 26.8% to 27.5% in two years, which the 10-K ascribes to inventory discipline and higher-margin businesses.²

Evidence it is narrowing

• Total operating margin has not risen in nine years: it is 0.5 points lower than in fiscal 2017, and since fiscal 2024 expenses have grown faster than gross profit C (calculated).¹⁴¹⁰²
• International operating income fell to $5.1B from $5.5B in fiscal 2026, partly on the PhonePe charge, and the segment’s gross profit rate fell 49 basis points on channel mix and price investment.²
• Self-insured general liability claims cost the US business about $0.9B more in fiscal 2026, which Walmart ascribes to rising claim costs across retail.² Healthcare for associates is rising too.¹⁶
• The second quarter of fiscal 2027 raised operating income by $2.1B, in a quarter with $2.9B of tariff refunds booked against cost of sales. Management says it will put a significant portion of that into lower prices.⁶⁵ That is a gift that will not repeat, and it goes straight to customers.
• The pharmacy rule takes about 125 basis points off comparable sales until it is lapped in January 2027.¹⁶

On balance I think the advantage is wide and still intact in the US, and I give the extra businesses credit for lifting margin in the future, not yet in the record. The cost side, wages and depreciation, is where the pressure shows. Whether the added income from advertising and membership out-runs those costs is the question that sets the value.

IIIThe competitive advantage

The honest comparison for Walmart is not one company. It sells groceries like Kroger, general goods like Target, club memberships like Costco, and ads like Amazon. I take the three closest: Costco, Sam’s Club inside Walmart, and Target. Walmart’s fiscal year ends in January; Costco’s ended on 30 August, so the dates differ by seven months.

Three things stand out. First, Walmart’s margin is slightly higher than Costco’s, 4.18% against 3.85%, but the two margins mean different things. Costco keeps its gross margin near 11% on purpose and earns half its profit from fees. Walmart earns 24% gross margin on a far wider range of goods and spends most of it on running costs C (calculated).²⁷ Second, Walmart is on a different path from Target. Target’s sales fell and its operating income fell 8.1%; Walmart’s sales and income rose.¹⁸² Third, the price. At 47 times adjusted earnings Walmart is priced close to Costco’s 49 times C (calculated). That is the surprising part, because Costco’s operating margin has risen for ten years and Walmart’s has not.⁷⁸ My Costco page carries the same warning about price.

Walmart’s Sam’s Club against Costco

Sam’s Club is the cleanest like-for-like. It earned an operating margin of 2.6% of net sales, 2.2% without fuel, against Costco’s 3.85% of revenue.²⁷ Sam’s sells about $155M per club; Costco sells $292M per warehouse, about 1.9 times as much.²⁷ The gap in sales per box explains most of the margin gap. Sam’s is improving: its eCommerce sales grew 26% in the latest quarter and club-fulfilled delivery is a large part of that.⁵ I don’t see it closing the gap to Costco in a decade, but it doesn’t need to, because it is only 13% of Walmart.

Where Walmart wins

• Grocery in the US, where it sold $285.5B in fiscal 2026.²
• Convenience at low cost: store-fulfilled delivery in under three hours, in about 95% of US homes.³
• Reach with lower-income and upper-income households together, which gives advertisers a big, mixed audience.¹⁶
• Pharmacy, where script counts and share are growing, as long as the rule on drug prices doesn’t remove more than it has.²³

Where it loses

• Profit per dollar of sales. It has not risen since 2017, while Costco’s has.¹⁴²⁷
• General merchandise, where sales were flat at about $115B for three years; my judgement is that specialty stores and Amazon have the edge. Marketplace categories are growing over 40% from a small base.²³
• Delivery to the home, done partly by independent contractor drivers, at a cost per order Walmart does not report.²
• Markets where it is a challenger, India and China, where the international eCommerce business still reports losses, though smaller.⁵

IVManagement

Walmart promotes from inside. The proxy counts three internal chief executive handovers since 2009, the latest announced in November 2025.⁹ John Furner became president and chief executive on 1 February 2026, aged 51, after more than 30 years at the company and, from November 2019, the job of running Walmart U.S.²⁹ Doug McMillon, who ran the company through fiscal 2026, left the board at the June 2026 meeting.⁹²⁰ The chairman is Greg Penner, a son-in-law of the Walton family.⁹

The bench is deep and mostly home-grown, with two notable outsiders in technology, Kumar and Danker, both hired from large technology companies, and a CFO from PayPal. A new chief executive, three new segment heads and a new chief growth officer all started their roles in February 2026. That is by design, but it is also a risk, because they are learning the jobs while the company spends close to $30B a year on capital.²¹²

Pay, and what it pays them to do

McMillon’s reported pay for fiscal 2026 was $29.2M: a salary of $1.5M, a cash bonus of $4.0M and stock awards valued at $21.1M. The pay ratio was 958 to 1, against a median associate’s $30,520.⁹ Furner’s reported pay was $27.3M, which includes a promotional grant of performance stock worth about $10M that vests in thirds on fiscal 2027 and 2028 results.⁹ Rainey’s was $15.5M.⁹

The design matters more than the sum. About 14% of a CEO’s target pay is an annual cash bonus based on operating income and sales-related measures, paying 0% to 125% of target. About 68% is performance stock, whose result is set by sales and return on investment in the first year of a three-year vesting period, paying 0% to 150%. Another 12% is restricted stock vesting over three years, and 6% is salary.⁹

So follow the money. Executives are paid for sales, operating income and Walmart’s own return on investment measure, each for one year, with two more years of service before the stock vests.⁹ They are not paid for the cash left after capital spending, or for the price of the stock. Return on investment is the check on spending, and it slipped from 15.5% to 15.1% in fiscal 2026 and was 15.4% for the twelve months to July 2026.²⁵ The stock is the long-run discipline: a CEO must own seven times his salary within five years of appointment, may not hedge or pledge, and cannot sell more than half of vested shares until he complies.⁹ I think that fits a company that wants steady growth. The weak point is the one-year clock for a business now spending $26B a year on projects that pay back over many years.

Some smaller facts. The proxy discloses family ties: a sister-in-law and a brother-in-law of the former chief executive, and brothers-in-law of the new one, work at Walmart, at pay from $124,000 to $1.2M, and Walmart paid $48.1M to a sporting-goods company run by a McMillon sister in fiscal 2026.⁹ None of it looks large against $713B of revenue. At the June 2026 meeting, 96% of the votes cast backed the pay plan C (calculated).²⁰ The Walton family votes about 44% of the shares, so that figure says less than the same number would at a widely held company.⁹

Their own money

Furner owned 475,161 shares in April 2026, worth about $59M at $123.51 C (calculated).⁹¹ McMillon owned 2,297,783, about $284M. All directors and executive officers as a group held 7,044,961, about $870M, with no pledging of Walmart stock.⁹ That is about 0.09% of the company C (calculated).⁹ Nobody running Walmart owns enough to steer it. The Walton family does. Walton Enterprises, LLC reports beneficial ownership of 3,516,197,849 shares, 44.11% of the class, including 513,524,456 held by the Walton Family Holdings Trust and voted by Walton Enterprises, about $434B at the current price C (calculated).⁹¹ Walton Enterprises votes by a majority of its four managing trusts, and the trust that holds the other shares has eleven family trustees.⁹ The family’s interest is that of a patient, undiversified owner. For other shareholders that is mostly good: no hostile bid, a long time horizon. The cost is that no outside owner can change the course.

What they did with the money, over a full cycle

I take fiscal 2017 to 2026 as the cycle. It covers a tax cut, a pandemic, an inflation burst, a legal settlement, a tariff shock and a shift to online sales. Over those ten years Walmart generated $315.8B of operating cash. It spent $153.0B on property and equipment, $20.8B on acquisitions, $63.2B on dividends and $67.4B on buybacks C (calculated).¹⁵² Debt including current maturities was $39.4B at the start and $44.8B at the end, and cash went from $6.9B to $10.7B.¹⁴²

Three things stand out. First, the buybacks were good value for most of the decade. Walmart paid an average of $38.19 a share over ten years, about a third of today’s price, and the 14% fall in the share count helped earnings per share rise faster than operating income C (calculated).²¹⁴ Second, they are no longer cheap. In fiscal 2026 it paid $95.13 a share, 67% above my base value, for $8.1B of stock.² At the current price each dollar of buyback buys 1.9 cents a year of owner cash, against 4.94 cents from a Treasury C (calculated).²² Third, the acquisitions have mostly been about reach, not return. Flipkart cost $16B in 2018, and the international segment’s own commentary still cites eCommerce losses, though smaller ones.¹⁷⁵

The return on that capital is fair, not exceptional. On my measure, operating profit after tax over equity, debt and finance leases less cash, it went from 14% in fiscal 2017 to 15% in 2026, with a range of 12% to 17% C (calculated).¹⁴² Walmart’s own return on investment, which adds back depreciation and rent, was 15.1% in fiscal 2026.² A business earning mid-teens on $147B of capital is solid. It is not the 30%-plus I measured at Costco, and the question is whether the added $16B a year of spending earns that or more.

The dividend per share was $0.94 for fiscal 2026 and is set at $0.99 for 2027.² The $7.5B paid in fiscal 2026 was 34% of net income C (calculated).² A new $30B repurchase authorization was approved in February 2026, with $25.1B left at 31 July 2026.⁵ Buybacks of $5.1B in the first half were smaller than the $6.2B of the year before.⁶

VFinancials

Walmart’s accounts are large and mostly plain, but three features make the reported earnings noisy. First, “other gains and losses” on equity investments swing with share prices: a loss of $8.4B in fiscal 2019 and a gain of $2.1B in 2026.¹³² Second, fiscal 2023 operating expenses included $3.3B of opioid-related legal settlements and $0.8B of restructuring in International.¹¹ Third, it has changed what it holds: Flipkart in, Asda and Seiyu out. I therefore lean on operating income, cash flow and the company’s adjusted figures, and I say when I do.

Margins

The operating margin ran between 3.3% and 4.7% of revenue and ended at 4.18% in fiscal 2026 C (calculated).¹⁵² The company’s adjusted operating income, which leaves out items such as the PhonePe stock charge and certain legal matters, was $31.0B, a 4.35% margin C (calculated).³⁴ At this margin small moves are large. One tenth of a point of net sales is $706M, or 2.4% of operating income C (calculated).² So the claims about margin that matter here are measured in tenths of a point, and I treat them that way in the cases.

Earnings quality

Earnings per share, split adjusted, went from $1.46 in fiscal 2017 to $2.73 in 2026, 7.2% a year, while operating income grew 3.0% a year C (calculated).¹⁴² The gap has three sources. The tax rate fell from 30.3% to 24.4%, mostly from the 2017 Tax Act, a one-time gift I do not assume again. Buybacks cut the share count 14%. And in 2026 net income included $2.1B of investment gains before tax.¹⁴² Walmart’s adjusted EPS for fiscal 2026 was $2.64, against $2.73 reported.⁵

Stock pay is the line I watch. It was $0.6B in fiscal 2017 and $3.6B in 2026, 16% of reported net income, up from 4% C (calculated).¹⁴² In 2026 $0.7B of that was the one-off PhonePe modification, and the company expects more at its subsidiaries if an offering triggers vesting.² Stock pay is a cost and is deducted in operating income, so my cash numbers include it. Free cash flow as Walmart reports it adds it back: of the $14.9B of reported free cash flow in fiscal 2026, $3.6B was stock pay settled in shares.²

From profit to cash

Operating cash flow was $41.6B in fiscal 2026 against $22.3B of consolidated net income.² The gap is depreciation of $14.2B, stock pay and other non-cash items of about $4.1B, deferred tax of $2.3B and an offset of $2.0B of investment gains that are not cash.² Working capital moved little: inventories took $1.4B, and payables and accrued liabilities gave back $3.2B.² Walmart says the year’s increase also came from lower cash taxes and the timing of payments, which I count as a mild flattering of the number.²

This is a feature of the model. Suppliers fund all of the inventory and a little more, and have for a decade. In fiscal 2017 payables were 96% of inventory and in 2026 107% C (calculated).¹⁴² Unlike a chain that is still opening stores, Walmart cannot count on that ratio to climb. I assume no cash from working capital in any of my cases, so growth costs a little more than the accounts suggest.

What an owner could take out

Here is the number I care most about. If Walmart stopped growing and simply kept its stores, clubs, centres and systems in good order, how much cash could it hand to its owners each year? I start from net income after stock pay, take out the investment gains and one-offs, add back depreciation, and deduct what it would cost to stand still.

The answer is about $19.0B, or $2.37 a share E (estimate). That is 13% below reported net income. I can’t pin it down more tightly, because Walmart doesn’t say how much of its capital spending keeps old buildings and systems working. Reasonable splits give $16.9B to $21.2B E (estimate). At 1.15 times depreciation I assume part of the automation spending is replacement of old equipment, but much of it is new capacity and I treat it that way. Either way, an owner buying at $123.51 gets about 1.9% of the price back each year from today’s business, against 4.94% on a ten-year Treasury.²² Everything above that has to come from growth, and from the margin the new businesses add.

The balance sheet

At 31 July 2026 Walmart held $11.5B of cash, against $50.4B of borrowings, $6.8B of finance leases and $16.5B of operating lease obligations, whose rent is already in operating expenses.⁶ Net of cash, borrowings and finance leases come to $45.7B, about 1.0 times fiscal 2026 operating income plus depreciation C (calculated).⁶² That is conservative for a business this size. Its short-term borrowings rose to $10.5B from $6.6B at year end, and the working-capital deficit to $26.9B, as the company funded a heavier capital plan.⁶ On 19 October 2026 it priced $3.0B of US notes at 5.050% to 5.550% and C$5.0B of Canadian notes.²³ I read that as ordinary refinancing, not stress. It does show what money costs: 5.55% for ten years, on one of the safest corporate credits there is.

In my valuation I deduct $45.7B of net debt, add $4.9B of equity and debt investments at their reported fair value, and take 3.5% off the equity value for the minority holders in Walmex, Flipkart and PhonePe E (estimate).⁶ The minority claim is my estimate: minorities earned $0.4B of fiscal 2026 net income and $0.7B to $0.8B in the two years before, and it has a book value of $6.3B.² About $3.9B of cash in January was not freely transferable.²

VIValuation

Start with what would go wrong

Before any numbers, I ask what would most likely make this a bad investment from here, and work back from that. For Walmart the business is not the likeliest problem. The price is, and after the price the cost of the machine it is building. Here are the three ways it goes badly wrong, in the order I think most likely.

1. The business does fine and the multiple falls. Walmart earns about 1.9 times as much per share in fiscal 2036 as the guided fiscal 2027 figure, as in my base case, but the market pays 25 times earnings instead of 47. The return on $123.51 would then be about 1.9% a year, with dividends, less than a Treasury E (estimate). Nothing has to break for this to happen. At the end of October 2017 the market paid 20.2 times operating earnings for the year ahead, and in October 2026 44.5 C (calculated).¹¹⁴²
2. The spending does not pay back. Walmart is putting $26.6B a year, soon about $30B, into automation, delivery and technology, double what it spent four years ago and well above depreciation.²⁵ If it stayed at 4% of revenue for ten years instead of falling to 3.2%, my base value would be $53 instead of $57. If the operating margin stayed at 4.45% instead of rising to 5.3%, it would be $48 E (estimate). The second matters more than the first.
3. A price, wage or tariff fight. Walmart’s edge is price. A one-point cut in gross margin on net sales costs $7.1B, a quarter of operating income C (calculated).² Amazon and Costco have large cash flows and can afford a long fight, and so can Walmart. Walmart has already said it will put a significant part of its $2.9B of tariff refunds into price.⁶

I can’t put honest odds on the third, so I don’t try. I can show what the first does, and I do below.

What the price implies

Walmart guides to adjusted earnings of $2.80 to $2.87 a share for fiscal 2027, up 6% to 9% on $2.64.⁵ Analysts expect $3.22 the year after, up 12%.²⁴ My base case lands near the guided figure for fiscal 2027, with operating income of $33.4B E (estimate). So I am not more cautious than the company about next year. The gap is about the ten years after it, and about what someone will pay in 2036.

Over ten years the price rose 5.29 times while operating earnings per share for the year ahead rose 1.76 times, from $1.58 to $2.78 in my base case C (calculated).¹¹⁴² Roughly two thirds of the gain, measured in logs, came from the market paying more for each dollar of profit C (calculated). That part of the record can’t repeat from here without the multiple going higher still.

Reverse DCF: what the price needs

Held at my base margins, the price needs revenue to grow about 13% a year for nine and a half years, to about $2.4T in fiscal 2036 C (calculated). The last nine years gave 4.4%, with inflation, the pandemic and two big acquisitions helping.¹⁵ Even with my bull margin of 6.4% it needs about 11% C (calculated). Or keep growth at my base and ask for margin: the price needs an operating margin of about 11% by 2036, against 4.2% today and a best year of 4.7% C (calculated). I don’t think any reasonable path gets there.

There are two other ways to read the same price. One is that it equals my base cash flows at a discount rate of about 5.5% C (calculated). That is the return the price offers if my base is right: 0.6 points above the Treasury and about what Walmart pays to borrow for ten years, 5.55%.²³ The other is to ask what a buyer in 2036 pays. If my base earnings come through and the market still pays 44 times them in 2036, the return from $123.51 is about 7.5% a year E (estimate). That is the real bet in this price: not a faster business, but a multiple that never comes down.

The discount rate

I discount at 8.0%. The capital asset pricing model with the 4.94% ten-year Treasury and Damodaran’s 4.20% implied equity risk premium gives 7.2% on Walmart’s beta against the market over 119 months, 7.3% over 60 and 6.6% over 36 C (calculated).²²²⁵²⁶ That is lower than the rate on my Costco page, 8.5%, because Walmart’s stock has moved much less with the market. I take eight, not seven, for three reasons. Beta is measured on past prices, and Walmart’s were steady while the stock was cheap; at 44 times earnings the next ten years need not look the same. A business priced at 47 times earnings carries risk from its multiple that its beta does not show. And Walmart itself pays 5.55% to borrow for ten years, so an owner, who ranks behind its lenders, wants a good deal more.²³

At 7.0%, near the low end of the market-model range, my base is $74 and my bull $116. No row of the table reaches the price on base assumptions. It takes my bull case and a rate between 6.5% and 7%.

Three cases

My base case is Walmart carrying on as it has for nine years, slightly better on margin. Revenue grows 5.3% in fiscal 2027, with currency helping, and fades to 3.3% by 2036, an average of 3.9% against 4.4% in the last nine years E (estimate).⁵¹⁵ Operating income is $33.4B in fiscal 2027, the guided figure, and $55.7B in 2036, 6.0% a year from $31.0B against 3.0% in the last nine C (calculated). The margin gains come from advertising, membership and marketplace growing faster than stores, and from automation lowering cost per case. Capital spending falls from 4.0% of revenue to 3.2% by 2032 as the build-out matures.

The bull case has revenue growth above 5% for most of the decade, an operating margin of 6.4% and capital spending down to 3.0%. That is operating income of $76B in fiscal 2036, 2.5 times today’s adjusted figure, and it is worth $88 E (estimate). The bear case has the margin stall near 4.4%, then ease to 4.0% as price investment, wages and claims absorb the new income, and growth slow to about 2.3%. Even the bear is a good business. It is only a poor purchase at $123.51.

What I can’t judge

Some inputs I can’t know, and I would rather say so than pretend. I don’t know how much of the $6.4B of advertising reaches profit, because Walmart doesn’t say; the same goes for membership, marketplace and eCommerce. I don’t know how much of the capital spending is upkeep, so I show a range. I don’t know what PhonePe, Flipkart or Walmex are worth to their minority holders, so I take a flat share of equity. I don’t know whether AI shopping agents will send traffic to Walmart or around it; the 10-K lists the risk but does not size it.² And I can’t know what multiple the market will pay in 2036. That last one matters more than all the others together, which is why I show the returns at several multiples instead of picking one.

Multiply it out

My base needs several things at once. Revenue growth of 4% a year or better for ten years: I would give that 55%. An operating margin rising above 5% by 2036: 50%. Capital spending falling from 4% to about 3.2% of revenue by 2032: 60%. Advertising and membership growing at double digits for five more years: 65%. No lasting price war or tariff shock that takes the margin back: 80%. Multiplied, that is about 9% E (estimate). They overlap, since good advertising growth helps the margin, so the true figure is higher, perhaps a fifth. And missing one doesn’t ruin the case. But the price needs more than my base. It needs my bull case or my base and a multiple near today’s in 2036. If I give that a one-in-five chance, the joint odds are about 2% before overlap E (estimate). The argument for the price is not simple. It needs many things to go right together.

Quality and price are two questions

How good is the business? Among the strongest retailers I cover: share gains in groceries, a store network that doubles as a warehouse, low-cost supply chain, new income lines that take on advertising margins, a patient owner, and modest debt. How good is the price? Poor, on my numbers. At $123.51 the price is above my bull case. A great business can be a poor purchase at the wrong price, and on this evidence that is what this looks like.

It helps to compare it with the next best use of the same dollar. A ten-year Treasury pays 4.94% with no risk to the dollars promised.²² Walmart returns about 5.5% a year on my base, half a point more, with all the risk of a share. On this site, Costco returns 6.2% on its base case at its rate of 8.5%, and sits 91% above its base value, while Walmart sits 117% above its own. Visa is 18% above its base value, Berkshire Hathaway 16% and Microsoft 44%. Target, which has no page here, trades at 19 times earnings against Walmart’s 47 C (calculated).¹⁸¹⁹ Of the businesses I cover, Walmart is one of the best, and for a business with a margin this low and this steady it sits a long way above my base value. Only faster-growing companies on this site, such as Tesla, CrowdStrike and Cloudflare, sit further above theirs.

The margin of safety

My margin-of-safety price is $40, 30% below my base value. At $40 my bear case returns 7.2% a year, near the 8.0% I require, and the base returns 9.8% C (calculated). A 30% cushion is what I use for a business this predictable. The price is 209% above it, and the stock last closed below $40 in June 2022.¹

Where this could be in 5 and 10 years

My model values the cash Walmart leaves for its owners, so I can ask what it says the shares are worth later. The table gives value per share in October 2031 and October 2036: the present value, at that date, of the owner cash that comes after it, on today’s share count and in that year’s dollars. Owner cash is free cash flow after tax and all capital spending, less 8% a year on today’s $40.8B of net debt after investments, less the 3.5% minority claim.⁶ The 8% charge is more than Walmart pays on its debt, so it understates cash paid out by about $2 a share over ten years E (estimate). Cash paid out runs to October 2036, and the return is the yearly rate from $123.51 to the 2036 value plus that cash E (estimate).

For the base to be right at five years, Walmart needs revenue of about $884B in fiscal 2031, growing 4.1% a year from fiscal 2027, an operating margin of 4.85% and capital spending down to 3.3% of revenue. Operating income would be $42.9B against $31.0B adjusted today. For ten years it needs $1.05T of revenue, a 5.3% margin and capital spending of 3.2%, which leaves $35.7B of free cash flow in fiscal 2036 E (estimate). The value rises by less than 8% a year because the cash goes out to owners as it is earned.

The bear and bull differ on three numbers: revenue growth (2.8% against 5.3% a year), the operating margin in 2036 (4.0% against 6.4%) and capital spending (3.3% against 3.0% of revenue). The discount rate matters as much: at 7% the base is worth $110 in 2036, at 9% $73 E (estimate).

The single most likely way the base is wrong is the margin. If it stays at 4.45%, the value is $62 in 2031 and $73 in 2036, and the yearly return from $123.51 is 2.8% below zero E (estimate).

These are estimates of value, not forecasts of the share price, and the market price can sit above or below value for years.

VIIThe case for the price

What most people miss

First, the new income lines are large next to the profit. Advertising of nearly $6.4B and membership fees of $4.4B come to $10.8B, equal to 35% of the $31.0B of adjusted operating income C (calculated).⁴² Second, the second quarter of fiscal 2027 flatters the trend. Walmart received about $2.9B of tariff refunds in the quarter, recorded as a reduction in cost of sales, about 9% of a year’s adjusted operating income C (calculated).⁶ The company says it is using a significant portion of it for price, and that underlying growth was at the top of its range.⁵⁶ Third, Walmart’s own buybacks have been a bargain at the price paid, not at the price now: $67.4B bought 1.77B shares at an average of $38.19, about a third of today’s price C (calculated).²¹⁴ Each of those changes how I read this year’s numbers.

The bull case

The bull case, as I understand it, in plain words: Walmart is the low-price grocer with the closest stores. It is turning those stores into a delivery network, and the same traffic lets it sell advertising, marketplace services and memberships at far higher margins than selling goods. As automation lowers the cost of each package and case, the margin rises from 4% toward 6%, while sales compound at 4% to 5%. Few retailers could do this, because few have 280 million customers a week.

Management’s version has numbers. In the 20 August 2026 release it raised fiscal 2027 guidance to net sales growth of 4.0% to 5.0% and adjusted operating income growth of 7.0% to 8.5%, at constant currency, with adjusted EPS of $2.80 to $2.87.⁵ John Furner, the CEO, said the multi-year growth in eCommerce shows customers choose Walmart for price, speed and convenience across a broad assortment. John David Rainey, the CFO, said the business model is getting stronger and more durable.⁵ The 10-K states the aim directly: operating income growing faster than sales, and return on capital improving over time.² The second quarter gave evidence: advertising up 38%, membership fees up 17%, eCommerce up 23%, and Walmart U.S. operating income up 20.6%.⁵

I found no named investor with a public, current case for Walmart that I can attribute. Of thirty well-known managers whose 13F filings I searched, two held any: the Gates Foundation Trust, with 8,390,477 shares worth $950M at 30 June 2026 and the same count at each of the two previous quarter ends, and Gardner Russo & Quinn, with 8,465 shares.²⁷²⁸ A holding is not a thesis, and neither published a view on the company that I could find. Altimeter, Atreides, Duquesne, Appaloosa, Berkshire Hathaway, Coatue, Tiger Global, ARK, Fundsmith, Akre, Baron and Markel reported none in their latest filings, and the latest Pershing Square filing I could read, for 31 March 2026, showed none.²⁹ The proxy lists no holder above 5% other than the Walton family entities.⁹

Against reality

Much of the bull case is true today. The share gains, the advertising growth and the delivery network are all in the filings.²⁵ So I tested what happens if Walmart does what management says, year after year. Suppose revenue grows 4.5% a year and adjusted operating income grows 7.5% a year for ten years, from the fiscal 2027 guide. That reaches $64B of operating income in fiscal 2036 and a margin of 5.7%, above my base case and below my bull. It is worth about $65 a share E (estimate). My bull case, which has more of everything, is worth $88. So if Walmart does all it says and hits its targets, it is a better business in 2036 than today by a wide margin, and the price is still not reached at 8.0%. The price needs revenue growth of about 13% a year at my base margins, against 4.4% in the last nine years, or a buyer in 2036 who pays about 44 times earnings again C (calculated).

So the honest version of the bull case at this price is about the multiple and the discount rate, not the business. At 7.0% my bull case is worth $116; it takes about 6.8% to reach the price C (calculated). Walmart has been priced higher each year for ten years partly because the market kept paying more: the multiple went from 14.8 to 44.5 C (calculated).¹¹⁴² That can continue. Nothing in the filings tells me it will.

What a 10x would take. Ten times $123.51 is $1,235 a share, about $9.9T of market value on today’s share count C (calculated). At 30 times earnings that needs about $329B of net income, 16 times fiscal 2026 underlying net income. At a 4.0% net margin, above the 3.1% Walmart earned in fiscal 2026, it needs about $8.2T of revenue, 12 times the $713B of fiscal 2026 C (calculated).² Doing that in ten years takes revenue growth of about 28% a year with no rise in the multiple. Walmart’s revenue grew 1.47 times in nine years. Its price rose 5.3 times, from a company worth about $218B, in a decade when the multiple tripled C (calculated).¹¹⁴ From about $1T, tenfold is close to impossible, and I would not build a case on it.

Where I come down

The new income lines moved me: advertising and membership are bigger and growing faster than the stores, and that is why my bull case has a margin of 6.4% and not 5%. The share gains moved me too. The price did not move me, because even my bull falls short of it, and neither did the second quarter, which had a one-off in it. What would raise my values most is the operating margin rising past 4.75% by fiscal 2030 while capital spending falls toward 3.4% of revenue, which would show the $26B a year earning its keep.

VIIIRisks, and what would change my view

The three ways this goes badly wrong are at the start of Valuation. These are the rest.

• Pharmacy policy. The new maximum fair price rule took about 125 basis points off Walmart U.S. comparable sales in the second quarter, and the 10-K says reimbursement and drug supply changes could hurt results.⁵¹⁶² Health and wellness is $69.5B of US sales.²
• Claims and labour. General liability claims cost about $0.9B more in fiscal 2026, associate healthcare costs are rising, and the US business has 1.6 million associates, 92% paid hourly.²¹⁶
• Tariffs and trade. Less than a third of what Walmart sells in the US is imported, mostly from China, Vietnam, Mexico, India and Canada. Walmart received $2.9B of refunds of tariffs it paid under the International Emergency Economic Powers Act, but new tariffs could return.⁶
• International and legal exposure. Show-cause notices in India on Flipkart, a competition case in India, a competition case against Walmex in Mexico, and indemnities for Asda’s equal value claims, with the third phase of hearings set to begin on 23 November 2026, are among the open matters, none with an estimate of loss that I could find.²⁶
• Opioids and money transfers. About 230 opioid cases remain in the MDL. A federal civil case has a trial date of November 2027, and a US Attorney’s office has subpoenaed records on money-transfer services. Walmart has accrued nothing for these and gives no range.²
• Subsidiary stock pay. About $3B of unrecognized stock pay at Flipkart, PhonePe and others would be booked if an offering triggers vesting.²
• Concentration and control. The Walton family votes about 44% of the shares, and management is new. If outside holders want change, they will not get it unless the family agrees.⁹

Geopolitical risk, and what it means for the value

Most of Walmart’s geopolitics comes through what it buys and what it owns abroad. Less than a third of what it sells in the U.S. is imported, mostly from China, Mexico, Vietnam, India and Canada.² International is 19% of sales and $5.1B of operating income, about 16% of the segment total C (calculated).² In India, Flipkart has an open show-cause notice on foreign investment rules, and Walmex has a competition case in Mexico.²⁶

Tariffs. The president sets them, and courts can undo them. Walmart has received $2.9B of refunds of the tariffs it paid under the emergency powers act.⁶ The 4.2% margin of fiscal 2026 already carries the tariffs paid that year. The refund is a one-off and I do not count it in later years. Mexico. It supplies the U.S. stores and Walmex earns in pesos, so trade terms and the peso reach Walmart twice. The filings give no figure for either.

Labour and consumers. The 10-K names the supply of workers and wage rates as outside factors, and the U.S. business has 1.6 million associates.² It says nothing of their immigration status, and I cannot judge it. I model stricter rules as higher wages: $1 an hour on 1.6 million associates at about 1,800 hours is $2.9B a year, 0.4% of revenue E (estimate). Walmart lists the level of public assistance payments as a risk but does not say how much of its sales are paid that way.¹⁶⁵ Less food aid hurts the lowest-income shoppers, and can bring richer ones in, so I model only the loss.

The model says these are small next to the gap. Each moves my base by $0.6 to $4. The price of $123.51 is $66 above the base, and it needs 13% revenue growth a year at my 8% rate. It already assumes none of these happen and a great deal more. What the price does not hold is the risk of a break in China supply, which I cannot price, and the row for it is a severe version, not a forecast.

What would raise my base value: the next three releases showing adjusted operating margin of 4.5% or more, capital spending guided below 4.0% of net sales for fiscal 2028, and advertising growing above 20%. What would lower it: comparable sales under 3% after the pharmacy effect fades, a price war that takes gross margin back, or a large deal.⁵²