Walmart Stock Will Continue to Surge in 2025

Walmart (NYSE: WMT) is set to report earnings today and they could give us an early idea of how the holiday season — and even 2025 — will shape up. 

So far in 2024, the Walmart stock is positively killing it, up 60% this year. The surge follows a series of positive earnings reports that showed higher-end spenders driving growth rather than its more traditional value shoppers.

That trend will likely continue through the end of the year and well into the next, making Walmart a great buy even after its surge. 

Here’s why…

What We Learned From Walmart’s Earnings

When we last checked in with the company, things weren’t going so great. That was back in May when the largest U.S. retailer was coming off its fiscal first quarter.

The headline figures were strong. The company reported:

• A 1.2% increase in revenue totaling $161.51 billion.
• A 13% increase in adjusted EPS, which came in at $0.60.
• And a 3.9% increase in same-store sales.

However, a troubling trend for the broader U.S. economy lurked beneath those figures. Namely, the increase in sales came from higher foot traffic, as opposed to consumers spending more money.

By the numbers, ticket growth was virtually flat — a little more than 1% — but foot traffic surged almost 4%.

So the takeaway wasn’t that consumers were spending more — it was that more consumers were shopping at discount outlets. Especially high-end consumers.

Walmart’s second quarter was similar, painting a pretty straightforward picture for Walmart CFO John David Rainey.

“We know that they’re looking for value and their dollars are stretched, they’re focusing in on those things that are providing value for them, they’re being choiceful when they buy the larger ticket items,” Rainey said.

His analysts corroborated by a drop in consumer sentiment and U.S. retail sales that persisted through much of the summer.

But now, here’s the thing…

As we moved into the fall, things began to shift for the American consumer.

An Improved Outlook for Walmart Stock

September retail sales were revised to a 0.8% increase, up from an initial increase of 0.4%. And they rose another 4% in October.

Meanwhile, the Michigan Consumer Sentiment Index registered 70.5 in October — its highest level since April. And the preliminary November is already showing a 2.5-point improvement of 73.

This is good news for Walmart.

The company has made major inroads with wealthier consumers this year, leading to a huge increase in online sales and Walmart+ subscriptions, which cost $12.95 monthly.

And now higher consumer sentiment that’s clearly translated into more spending could boost Walmart’s earnings even higher.

That’s likely what we’ll see today.

Wall Street analysts anticipate a 4% rise in revenue and 5% growth in adjusted operating income.

It wouldn’t be surprising to see Walmart top those estimates either. And regardless of what happens in 2025, the company has demonstrated a broader appeal that will continue to ensnare consumers of all stripes.

Given what we’ve seen this year, it looks to be a winner in good times and bad. That makes Walmart stock a strong buy in my opinion.