The 2-Minute Case For Walmart

Updated: Apr 13, 2020

Walmart (WMT) has been on our radar for a long time. It's the world's largest private-sector employer and during the Covid-19 pandemic, Walmart has rallied, due in part to the increase in business. Sales have shot up 30% higher, year over year.

Grocery orders have increased over 200%.

Online orders have increased 150%

This level of growth won't continue post-pandemic but we're betting the company keeps a large percentage of these customers.

Walmart has a huge brick-and-mortar footprint. This gives it an edge over its main competitor Amazon in multiple ways, but importantly - same-day delivery, which is increasing in popularity.

E-Commerce is Walmart's ace in the hole. The company's online division grew 37% in fiscal 2020 and this growth should continue well into the coming years.

Obviously, Walmart is highly focused on competing with Amazon and it's learning some great lessons from Amazon's success. The chain is now storing and shipping products for third-party vendors for the first time. This move is intended to strengthen its online unit - its biggest growth engine.

Walmart Fulfillment Services allows third-party vendors to pay Walmart to pack and ship their goods. This service was previously not available and should increase the number of items with two-day or next day shipping - a move that will likely appeal to online customers.

The company also said it will also make returns easier.

The bottom line? More and more customers shopping at Walmart stores in-person and online.

A few metrics:

  • Walmart international continues to increase the company's profitability, which now accounts for 23% of its revenue.

  • Net income has increased 12% year-over-year, beating the S&P 500 average. This should continue and will likely propel the stock higher.

  • Its stock price is cheap compared to peers in the general merchandise sub sector.

As for dividends, Walmart has increased its annual dividend every year since it started paying it in 1974.

Because of the leadership Walmart had demonstrated and the POTENTIAL it has in expansion, we're adding the stock to Stock PRO.