In a stock market inclined towards selling yesterday, Walmart shone by posting an exceptional performance, increasing by 6.99%. This remarkable growth surpasses all other companies in the S&P 500, propelling Walmart beyond the half-trillion-dollar mark in market capitalization.
Revenue Growth and Market Expansion
Walmart’s revenues saw a significant increase, recording a 6% rise compared to the last quarter of 2024. This growth is supported by a 4.6% increase in the United States and a 12.1% increase in the rest of the world. However, it is important to note that despite this strong international growth, operations outside the United States account for only 20% of Walmart’s total revenue, with the rest generated on American soil.
Consumer Behavior and E-commerce Surge
This growth is largely attributed to an increase in store visits by customers, even though the average transaction amount remained stable. Walmart highlighted its ability to gain market share among higher-income households, thus emphasizing its resilience in the face of inflation. As the cost of living rises and inflation struggles to abate, even affluent consumers are turning to low-cost retailers like Walmart.
Additionally, Walmart’s global e-commerce sales surged by 21%, driven by in-store pickup and delivery options as well as the company’s online marketplace.
Operational Considerations and Workforce Adjustments
These positive results come as Walmart considers job cuts and encourages many employees to relocate to its headquarters in Bentonville.
Comparison with Costco
In comparison to Costco, the latest results from the latter are less favorable. Although earnings per share (EPS) increased by 2.02%, revenue declined by 1.17%. However, analysts’ forecasts for the upcoming quarter ending in May indicate an 8% increase in revenue and a 26% increase in EPS for Costco, surpassing Walmart’s growth figures of 6% and 22.4%, respectively.
Valuation Analysis
Finally, in terms of the price-to-earnings ratio (P/E ratio), Walmart has a P/E ratio of 27.3, while Costco’s is 52. These figures suggest that Walmart is not significantly overvalued, unlike Costco, whose P/E ratio is much higher. Indeed, it would take 52 times Costco’s annual earnings to buy the company, highlighting a significant valuation by investors.
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