Walmart (WMT) has weathered countless economic cycles in its 60+ year history, and in my opinion, despite economic downturns, the company continues to thrive. I am bullish on the stock right now. With its reputation as an affordable retailer offering both essential and discretionary items, Walmart has delivered a 38% year-to-date gain for investors. Shares have nearly doubled over the past five years, and recent financial reports reinforce my belief that Walmart will keep defying economic challenges and thriving.
Walmart Thrives Despite Economic Challenges
Despite the current economic challenges, I remain bullish on Walmart. The economy is struggling, and while employment figures might look decent, inflation has stretched many people’s budgets thin, leading to a rise in those living paycheck to paycheck. As consumers cut back on non-essential purchases, many companies are reporting slowing revenue growth, with some even experiencing declining year-over-year sales.
However, Walmart’s strong position is a key reason for my optimism. People still need to buy essentials, and they are increasingly turning to the most affordable and convenient options. Walmart excels in this area, providing a wide range of products—from groceries to clothing—all at competitive prices. This combination of convenience and affordability helps Walmart stand out, minimizing investor losses during economic slowdowns.
Moreover, Walmart is attracting a broader customer base, including wealthier consumers seeking to save money and enjoy convenient shopping. This trend suggests that even as the economy recovers, Walmart could retain these customers, further boosting its growth prospects.
With competitors like Target (TGT) struggling with declining sales, Walmart is well-positioned to capture a larger share of the market. The ongoing battle between Walmart and Costco (COST) for retail dominance highlights Walmart’s strong potential to thrive, even amid economic challenges. This solid performance in difficult times reinforces my positive outlook on Walmart’s stock.
Walmart Demonstrates Strong Performance
Despite facing slower economic cycles, Walmart’s recent performance bolsters my bullish thesis on the stock. The company not only manages to thrive during economic downturns but also demonstrates significant growth when the economy is booming. Recent earnings results showcase Walmart’s continued expansion and strength even in a strong economy. For Q2 FY25, Walmart reported a 4.8% year-over-year increase in consolidated revenue, reaching $169.3 billion.
This strong performance led the company to raise its Fiscal 2025 guidance, forecasting net sales growth between 3.75% and 4.75% for the year. Revenue for Q3 FY25 is expected to grow between 3.25% and 4.42% year-over-year.
Walmart’s e-commerce and advertising segments are also performing well. Online sales surged by 21% year-over-year, driven by the success of store-fulfilled pickup and delivery services and Walmart’s expanding marketplace. This growth in e-commerce is a key factor in Walmart’s ability to gain market share.
In addition, Walmart’s global advertising business saw a 26% increase in revenue year-over-year, with Walmart Connect in the U.S. growing by 30%. Although advertising is a smaller part of Walmart’s overall revenue, its higher margins and extensive customer base—serving more than 37 million customers daily and over 255 million weekly—present significant opportunities for profit expansion.
Overall, Walmart’s strong performance in various areas makes it clear that the company is in a good spot. Whether the economy is up or down, the company’s strength and growth potential are clear.
Walmart’s International Sales Grow Faster than Domestic
Walmart’s substantial footprint in both the U.S. and international markets strengthens my bullish perspective on the stock. With over 5,000 retail units in the United States and more than 10,600 globally, Walmart’s expansive presence offers significant potential for long-term growth. This is clearly reflected in the recent earnings report.
International sales rose by 7.1% year-over-year, outpacing the 4.1% increase in U.S. sales. This success is largely due to Walmart’s strategic investments in Flipkart, which have driven higher international e-commerce sales and advertising revenue. Moreover, Walmart’s strength in food and consumables, which accounts for over half of its total revenue, remains a key driver in both domestic and global markets.
Overall, Walmart’s extensive reach and successful international ventures highlight its ability to support high growth rates, further reinforcing the positive outlook for investors.
Is WMT Stock a Buy, According to Analysts?
Wall Street analysts are bullish on the stock and believe that it has more room to run. It’s rated as a Strong Buy by 30 analysts, with a projected 1% upside from current levels. The highest price target of $81 suggests that Walmart shares could rally by an additional 11%.
The Bottom Line on Walmart Stock
Walmart is a defensive stock that can continue to rally during strong economic cycles. More than half of the company’s total sales come from groceries, giving it insulation during economic slowdowns.
Meanwhile, revenue continues to grow. The company is gaining ground in domestic and international markets with promising growth in e-commerce and advertising. In my opinion, Walmart’s strategic investments to diversify its revenue and generate higher returns for long-term investors reinforce my bullish outlook on the stock. It’s worked out well for investors so far, as the stock has outperformed the S&P 500 over the past five years.
