Walmart (NYSE:) has been the star performer on the Dow this year, with its stock price soaring by 43%. The retail giant has been attracting customers from various income levels with its discount pricing, leading to its impressive growth.
Walmart’s Success with Higher-Income Shoppers
In the latest earnings report, Walmart saw a 5% increase in revenue and a 10% rise in adjusted earnings. Same store sales in the U.S. went up by 4.2%, while the ecommerce division experienced a 22% revenue boost. Walmart Connect, the company’s advertising arm, also saw a 30% increase in advertising sales.
One key factor behind Walmart’s success has been its ability to reduce inventory in the U.S. by almost 3%, leading to cost savings and improved efficiency. The focus on value and convenience has resonated well with a wider range of shoppers, including higher-income households.
CEO Doug McMillon highlighted Walmart’s appeal to higher-income consumers, stating that “value matters to everyone.” The company’s Walmart+ membership program, store remodels, and growth in delivery and ecommerce are all contributing to its success.
Is it Too Late to Buy Walmart Stock?
Walmart stock has shown resilience even in challenging market conditions. Over the past 10 years, it has delivered an average annualized return of 11.6% and a five-year annualized return of 15.1%. Currently trading at $75 per share, Walmart has a trailing P/E ratio of 39 and a forward P/E of 31.
While the stock’s valuation may be on the high side, Walmart has raised its guidance for the second half of the fiscal year, expecting modest revenue and earnings gains. For investors looking to buy, it might be wise to wait for a potential dip in the stock price.
Overall, Walmart is considered one of the best defensive stocks available, offering reliable returns, especially during market downturns. Despite its recent surge, Walmart remains an attractive investment option for those looking for stability and growth potential.