Earnings Preview: Walmart Stock Is Set for Another Big Year

Walmart stock (NYSE: WMT) was one of my favorite plays last year, having soared 87% in the past 12 months. And I think today’s earnings report is going to help build and maintain momentum through 2025. 

Here are the three principle reasons I like Walmart stock:

1. Earnings are already moving in the right direction.
2. The company has broadened its appeal by developing its e-commerce business and bringing in higher-value customers.
3. The macro environment is trending in its favor.

Let’s start with a quick look at Walmart’s earnings.

Walmart Earnings

Walmart is set to report its fourth-quarter and full-year earnings next week. The Wall Street consensus is for a 6.7% increase in EPS ($0.64) and a 3.4% increase in revenue ($179.25 billion).

However, the company has made a habit of topping analysts’ estimates lately. Third-quarter earnings, released in November, showed a EPS of $0.58 compared with $0.53 expected, and revenue of $169.59 billion, topping the $167.72 billion forecast.

In another encouraging sign Walmart raised its full-year outlook for net sales growth to a range of 4.8%–5.1% — up from a previous forecast of 3.75%–4.75%.

Comparable sales, which offer a better reflection of a retailer’s success, also improved, with a 5.3% increase at Walmart stores and 7% increase at Sam’s Club.

So, to my first point, earnings have looked good for the past year. 

Now to my second point…

Digital Growth Drivers

The main catalyst behind this growth surge is a dedicated effort to improve e-commerce — online sales and delivery.

Walmart has spent a total of $42 billion on capex over the past three fiscal years — and $23 billion of that was spent in FY24 alone.

Some of that money went toward refurbishing brick-and-mortar stores, but it also went into e-commerce, which includes the company’s website, premium subscription service, online ordering, and fulfillment.

As a result, more than half of Walmart’s fulfillment-center volume is now automated, double what it was a year earlier, and U.S. delivery costs per order are down 40%. 

Meanwhile, digital sales have grown by 20% year over year in each of the past three quarters. Those gains include curbside pickup and home delivery orders, as well as advertising and third-party marketplace businesses.

The dedication to e-commerce growth has also helped attract wealthier customers and new subscribers to its Walmart+ premium subscription service.

Indeed, Walmart’s hallmark focus on "everyday low prices" is what made it a discount retail mainstay. But branching out online is attracting more monied clientele.

Or rather, people with more money are more willing to pay delivery fees of $7.95–$9.95, or the $12.95 monthly cost of a Walmart+ subscription. 

More Money — Same Problems

To that point, for the past two quarters, 30% of U.S. customer orders have come with an extra fee to get delivery within a shorter time frame, like within one hour or within three hours

Commensurate with that, Walmart U.S. transactions rose 3.1% in the third quarter, and average ticket increased by 2.1% year over year. 

Walmart’s inroads with higher-net-worth individuals are further corroborated by third parties. 

Some 89% of households earning at least $100,000 said they shopped at the retailer, according to Morning Consult — up from 77% five years ago. And roughly 36% of high-income respondents surveyed said they had a “very favorable” impression of Walmart, up from 27% in 2019.

Now, part of this could be that the sting of inflation these past few years has pushed more middle- and upper-class shoppers toward the nation’s preeminent discount retailer. 

But Walmart’s success hasn’t been mirrored by other low-cost outlets like dollar-store chains. Indeed, it stands in sharp contrast to retail outlets like Dollar General (NYSE: DG) and Dollar Tree (NASDAQ: DLTR), which are seeing their earnings head in the opposite direction.

The only real question going forward — and it’s one faced by just about every industry in America — is what effect President Trump’s tariffs policies will have on Walmart’s business.

The company has conceded that it may have to pass higher costs on to consumers. But again, that’s going to be an issue for every American retailer — not just Walmart. 

An additional silver lining can be found in the fact that two-thirds of the products Walmart sells are made, grown, or assembled in the U.S., mitigating the threat tariffs pose to at least some extent.

Better still, with the government intervening to block the Kroger-Albertsons merger, Walmart’s position as the country’s top grocery retailer remains safe. So if inflation does damper spending, the company will still have a safety valve peddling foodstuffs.

That’s why I continue to like Walmart stock — despite its massive run-up over the past year.

Fight on,

Jason Simpkins

Simpkins is the founder and editor of Secret Stock Files, an investment service that focuses on companies with assets — tangible resources and products that can hold and appreciate in value. He covers mining companies, energy companies, defense contractors, dividend payers, commodities, staples, legacies and more…

In 2023 he joined The Wealth Advisory team as a defense market analyst where he reviews and recommends new military and government opportunities that come across his radar, especially those that spin-off healthy, growing income streams. For more on Jason, check out his editor's page.

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