Walmart Stock Surges 76% in 2024: Is WMT Still a Buy for 2025?

Walmart Inc. WMT has been a standout performer in 2024, with its stock soaring an impressive 76.4% year to date, outpacing broader market benchmarks and solidifying its position as a retail powerhouse. The solid rally comes from a strong operational performance, strategic initiatives and resilience in a challenging economic environment. However, a pressing question emerges: Does WMT still have room to grow in 2025, or has the stock already hit its peak?With its impressive year-to-date gain, Walmart has outpaced the industry’s surge of 72.8%, alongside beating the Zacks Retail – Wholesale sector’s growth of 30.5% and the S&P 500’s increase of 27.7%. At the current price of $92.68, WMT stock trades 3.6% lower than its 52-week high mark of $96.18 attained on Dec. 6, 2024. The stock also trades a significant premium of 78.7% to its 52-week low of $51.87.WMT Price Performance vs. Industry, S&P 500 & SectorImage Source: Zacks Investment ResearchWalmart’s strong performance in 2024 is supported by positive technical indicators. WMT trades above its 50 and 200-day moving averages, signaling strong upward momentum and price stability. The moving average is an important indicator for gauging market trends and momentum. This technical strength indicates positive market sentiment and confidence in the company's financial health and prospects.WMT Trades Above 50 and 200-Day Moving AveragesImage Source: Zacks Investment ResearchWhat’s Behind Walmart’s Success Story?Walmart continues to be driven by its omnichannel approach, which blends the convenience of digital shopping with the reliability of physical stores. Rapid expansion in curbside pickup and delivery services, along with innovations like Sam’s Club’s "Just Go" checkout, highlights its commitment to enhancing customer experiences. This seamless blend of online and offline channels has helped Walmart attract a wider audience, with higher-income households now contributing 75% of its U.S. share gains. Retail bellwethers like Target TGT and Costco COST are also advancing their omnichannel efforts, reflecting the industry-wide shift toward this approach. Walmart’s e-commerce business has been central to its growth strategy, with global online sales surging 27% in the third quarter of fiscal 2025, driven by pickup & delivery and the marketplace. The company has invested heavily in technology, including advanced supply chain automation, which forms more than 50% of its fulfillment center volume. Walmart’s marketplace offerings and premium delivery options have also gained traction, helping it carve out a stronger position in the digital space.Beyond traditional retail, Walmart is diversifying its revenue base with high-margin businesses such as advertising, membership programs and marketplace services. In the third quarter, advertising revenues grew by 28%, driven by Walmart Connect and international platforms like Flipkart. Membership income also saw robust growth, with Walmart+ and Sam’s Club delivering double-digit increases. These high-margin ventures not only enhance profitability but also deepen customer engagement.Walmart’s ability to offer everyday low prices while improving convenience has been a critical driver of its growth. By rolling back prices on thousands of items, Walmart continues to attract budget-conscious shoppers. Internationally, the company’s operations in key regions like Mexico (Walmex), India (Flipkart and PhonePe) and China play a pivotal role in driving its long-term growth strategy.What to Expect From Walmart in FY25?The company revised its fiscal 2025 guidance upward on its last earnings call, signaling confidence in its ongoing momentum. WMT now expects consolidated net sales growth of 4.8-5.1% (at constant currency or cc) compared with 3.75-4.75% expected earlier. Adjusted operating income is expected to increase 8.5-9.25% at cc, up from 6.5-8% projected before. Walmart expects adjusted earnings per share (EPS) for fiscal 2025 to be in the $2.42-$2.47 range, up from the prior guidance range of $2.35-$2.43. The guidance suggests growth from the adjusted EPS of $2.22 recorded in fiscal 2024.This optimism is echoed by analysts, as the Zacks Consensus Estimate for Walmart’s current and next fiscal year EPS has risen over the past 60 days. Image Source: Zacks Investment ResearchFind the latest EPS estimates and surprises on Zacks Earnings Calendar.Is Walmart’s Stock Price Justified After Its Rally?Walmart’s valuation appears stretched when compared to industry peers such as The Kroger Co. KR. The company's forward 12-month price-to-earnings (P/E) ratio stands at 34.2, surpassing the industry average of 31.26. This elevated valuation suggests investors might be paying a premium relative to the stock’s projected earnings potential. Adding to concerns, Walmart holds a Value Score of C, signaling caution regarding its pricing. The high valuation raises questions in light of near-term challenges.WMT Stock Looks OvervaluedImage Source: Zacks Investment ResearchWalmart’s Ongoing Struggles: A Closer LookWalmart is facing margin pressures due to changes in its product mix, driven by the growth of GLP-1 drug sales within its health and wellness segment. While this growth benefits revenues, it poses challenges for gross profit. During its third-quarter earnings call, Walmart indicated that it expects a generally steady consumer environment but continues to face pressure from its diverse global product mix and formats.As Walmart expands its digital channels, it incurs higher SG&A expenses compared to traditional brick-and-mortar operations. Costs have risen due to incentive payments for frontline associates and increased marketing investments. Ongoing inflation in the consumables and food sectors continues to threaten margins. Currency fluctuations are also a concern. These headwinds are expected to continue into the fourth quarter, with anticipated reductions of 100 basis points for sales and 200 basis points for operating income.Despite raising the full-year guidance, Walmart’s fourth-quarter projections signal a deceleration in growth compared to the third quarter. The implied constant-currency (cc) sales growth of 3%-4% and operating income growth of 5%-7.5% are softer than the third-quarter results, wherein revenues and consolidated operating income grew a respective 6.2% and 9.8% at cc.Walmart Stock: Investors’ GuideAs Walmart continues to innovate and adapt, its growth story is far from over. With strategic investments in technology, a constant focus on customer needs and the expansion of high-margin revenue streams, the company is well-positioned to sustain its upward trajectory. However, Walmart faces ongoing challenges, including margin pressures from shifts in the product mix, inflation and currency fluctuations. While its impressive 2024 stock rally and long-term strategy are promising, the company’s elevated valuation and near-term headwinds warrant caution. For now, maintaining positions in the stock looks prudent. Walmart currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Free: 5 Stocks to Buy As Infrastructure Spending SoarsTrillions of dollars in Federal funds have been earmarked to repair and upgrade America’s infrastructure. In addition to roads and bridges, this flood of cash will pour into AI data centers, renewable energy sources and more.In, you’ll discover 5 surprising stocks positioned to profit the most from the spending spree that’s just getting started in this space.Download How to Profit from the Trillion-Dollar Infrastructure Boom absolutely free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Target Corporation (TGT): Free Stock Analysis Report Walmart Inc. (WMT): Free Stock Analysis Report The Kroger Co. (KR): Free Stock Analysis Report Costco Wholesale Corporation (COST): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks