Walmart shares soared 60% this year, profits grow
BENTONVILLE, Arkansas: Walmart is on track for its most robust annual stock performance in over two decades, buoyed by its low-price strategy and growing appeal among budget-conscious consumers.
The retail giant's shares have soared 60 percent this year, far outpacing the broader market and key competitors.
In comparison, the S&P 500 Consumer Staples index has risen 13 percent, while the Consumer Discretionary index is up 21 percent. Rival Target has managed only a seven percent gain, underscoring Walmart's dominance in a challenging economic environment. The stock's exceptional run recalls its rapid growth in the late 1990s, including a 106 percent jump in 1998 during the expansion of its supercenter format and international ventures.
"Organic growth along with a strong balance sheet and low levels of debt make Walmart a very popular stock right now," said Brian Mulberry, client portfolio manager at Zacks Investment Management.
According to LSEG estimates, analysts expect revenue to rise four percent and adjusted operating income to grow five percent.
Walmart's operating income has been growing faster than revenue, thanks to its investments in e-commerce and advertising. The company has poured billions into automating its supply chain to stock fresher produce, improve delivery times, and enhance its grocery offerings for online shoppers.
"Walmart's execution has been excellent, especially in rural areas where Amazon lacks a developed logistics network," said David Wagner, head of equities at Aptus Capital Advisors.
The retailer has also tapped into high-margin revenue streams like its marketplace and retail media units. In the second quarter, these segments accounted for over half of Walmart's operating income growth, CFO John Rainey said in August.
Launched in 2019, Walmart's advertising business is still in its early stages compared to Amazon's established platform. However, it has delivered robust growth in recent quarters, outpacing Amazon in percentage gains.