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Walmart Inc. 10-K Analysis & Summary – 3/14/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

Walmart Inc.

Filing date:

03/14/2025

TLDR:

ELI5:

Walmart made more money this year than last year because their stores in the US and Sam’s Club did well. They’re also working on making it easier to shop both online and in stores.

Accession #:

0000104169-25-000021

Published on

Analyst Summary

  • Walmart’s net sales increased by 5.0% to $674.538 billion, driven by strong performances in Walmart U.S. and Sam’s Club U.S.
  • Consolidated net income rose significantly to $20.157 billion, reflecting enhanced operational efficiency and cost management.
  • Gross Profit Margin increased to 24.1%, up from 23.7% in the previous year, indicating effective pricing strategies and growth in higher-margin businesses.
  • Operating Profit Margin increased to 4.4%, up from 4.2% in the previous year, reflecting improved operational efficiency and expense management.
  • Net Profit Margin increased to 3.0%, up from 2.5% in the previous year.
  • Return on Assets (ROA) increased to 7.9%, up from 6.6% in the previous year.
  • Return on Equity (ROE) increased to 19.95%, up from 17.17% in the previous year.
  • Diluted EPS increased to $2.41, up from $1.91 in the previous year.
  • Management emphasizes the focus on omni-channel strategies, cost management, and strategic capital allocation.
  • The company is investing heavily in technology, supply chain improvements, and customer-facing initiatives.
  • During fiscal year 2025, Walmart repurchased 61.9 million shares at an average price of $72.72 per share, totaling $4,494 million.

Opportunities and Risks

  • Opportunity: Continued expansion of eCommerce platforms and omni-channel capabilities.
  • Opportunity: Growth in membership programs like Walmart+ and Sam’s Club memberships.
  • Opportunity: Leveraging strategic alliances and partnerships to expand the company’s ecosystem.
  • Opportunity: Expanding into higher-margin areas such as digital advertising, marketplace services, and financial services.
  • Risk: Intense competition from brick-and-mortar, eCommerce, and omni-channel retailers.
  • Risk: Macroeconomic factors, such as inflation, unemployment, and consumer spending patterns, can impact financial performance.
  • Risk: Disruptions in the global supply chain can affect product availability and costs.
  • Risk: Risks related to data breaches and cyberattacks on the company’s information systems.
  • Risk: Compliance with complex and evolving laws and regulations in multiple jurisdictions.
  • Risk: Failure to meet market expectations for financial performance could adversely affect the market price and volatility of our stock.

Potential Implications

Company Performance

  • Continued focus on omni-channel strategies and cost management positions Walmart for sustained growth and competitiveness.
  • Investments in technology, supply chain improvements, and customer-facing initiatives are expected to drive future performance.
  • The company’s ability to navigate macroeconomic challenges and supply chain disruptions will be critical for maintaining profitability.

Stock Price

  • Positive financial performance and strategic initiatives could positively impact the stock price.
  • Failure to meet market expectations or address key risks could negatively impact the stock price.
  • Share repurchase activity suggests a strategic effort to return value to shareholders and potentially signal management’s confidence in the company’s future prospects.

Walmart Inc. (WMT) – Form 10-K Report for Fiscal Year Ended January 31, 2025

Executive Summary

This report analyzes Walmart Inc.’s (WMT) Form 10-K filing for the fiscal year ended January 31, 2025. The analysis covers Walmart’s business performance, financial health, key risks, and opportunities. Overall, Walmart demonstrates continued growth and adaptation in the evolving retail landscape, with a strong emphasis on omni-channel strategies and cost management. However, the company faces significant risks related to competition, supply chain disruptions, cybersecurity, and regulatory compliance. A ‘Hold’ recommendation is appropriate, reflecting both the company’s strengths and the identified challenges.

Company Overview

Walmart Inc. is a global omni-channel retailer operating through three segments: Walmart U.S., Walmart International, and Sam’s Club U.S. The company focuses on providing customers with everyday low prices and a seamless shopping experience through its stores and eCommerce platforms. Walmart is adapting to changing consumer preferences by investing in technology, supply chain improvements, and new service offerings.

Detailed Analysis

Financial Performance

Key Financial Data

Metric Fiscal Year 2025 (Millions USD) Fiscal Year 2024 (Millions USD) Fiscal Year 2023 (Millions USD)
Net Sales $674,538 $642,637 $605,881
Gross Profit $162,785 $152,495 $142,160
Operating Income $29,348 $27,012 $20,428
Net Income Attributable to Walmart $19,436 $15,511 $11,680
Diluted EPS $2.41 $1.91 $1.42

Key Ratios and Trends

  • Revenue Growth: Walmart demonstrates consistent revenue growth, driven by comparable sales increases and eCommerce expansion.
  • Gross Profit Margin: The gross profit margin improved, reflecting effective pricing strategies and growth in higher-margin businesses.
  • Operating Margin: The operating margin also increased, indicating improved operational efficiency and expense management.
  • Return on Investment (ROI): ROI increased to 15.5% in fiscal 2025 from 15.0% in fiscal 2024, reflecting efficient capital deployment.
  • Free Cash Flow: Free cash flow decreased slightly due to increased capital expenditures, but remains strong at $12.7 billion.

Segment Performance

Segment Net Sales (FY2025, Millions USD) Operating Income (FY2025, Millions USD)
Walmart U.S. $462,415 $23,882
Walmart International $121,885 $5,501
Sam’s Club U.S. $90,238 $2,404
  • Walmart U.S.: Strong comparable sales growth driven by grocery and health & wellness. eCommerce continues to be a significant contributor.
  • Walmart International: Positive comparable sales across international markets, with eCommerce growth. Currency exchange rate fluctuations impacted net sales.
  • Sam’s Club U.S.: Increased membership income and comparable sales, with growth in grocery and health & wellness.

Management’s Discussion and Analysis (MD&A) Insights

  • Management emphasizes the focus on omni-channel strategies, cost management, and strategic capital allocation.
  • The company is investing heavily in technology, supply chain improvements, and customer-facing initiatives.
  • Management acknowledges the impact of macroeconomic factors, such as inflation and supply chain disruptions, on the company’s performance.

Risk Factors

  • Competition: Intense competition from brick-and-mortar, eCommerce, and omni-channel retailers.
  • Economic Conditions: Macroeconomic factors, such as inflation, unemployment, and consumer spending patterns, can impact financial performance.
  • Supply Chain Disruptions: Disruptions in the global supply chain can affect product availability and costs.
  • Cybersecurity: Risks related to data breaches and cyberattacks on the company’s information systems.
  • Legal and Regulatory Compliance: Compliance with complex and evolving laws and regulations in multiple jurisdictions.
  • Failure to meet market expectations: Failure to meet market expectations for financial performance could adversely affect the market price and volatility of our stock.

Opportunities

  • eCommerce Growth: Continued expansion of eCommerce platforms and omni-channel capabilities.
  • Membership Programs: Growth in membership programs like Walmart+ and Sam’s Club memberships.
  • Strategic Alliances: Leveraging strategic alliances and partnerships to expand the company’s ecosystem.
  • New Service Offerings: Expanding into higher-margin areas such as digital advertising, marketplace services, and financial services.

Uncommon Metrics

  • Walmart+ Membership: Growth in Walmart+ membership indicates increasing customer loyalty and engagement.
  • eCommerce Contribution to Comparable Sales: The increasing contribution of eCommerce to comparable sales highlights the success of Walmart’s omni-channel strategy.

Conclusion and Actionable Insights

Walmart demonstrates a solid financial performance and strategic adaptation to the changing retail environment. The company’s focus on omni-channel strategies, cost management, and new service offerings positions it for continued growth. However, investors should be aware of the significant risks related to competition, supply chain disruptions, cybersecurity, and regulatory compliance.

Recommendation: Hold. While Walmart’s long-term prospects are positive, the identified risks warrant a cautious approach. Investors should monitor the company’s ability to navigate these challenges and capitalize on its growth opportunities.

Commentary

Walmart’s fiscal year 2025 demonstrates solid financial performance with revenue growth and improved profitability. Net sales increased by 5.0% to $674.538 billion, driven by strong performances in Walmart U.S. and Sam’s Club U.S. Consolidated net income rose significantly to $20.157 billion, reflecting enhanced operational efficiency and cost management. The company strategically allocated capital towards supply chain improvements, customer-facing initiatives, and technology, positioning itself for sustained growth and competitiveness.

Financial Ratio and Metric Analysis

Profitability

  • Metric: Gross Profit Margin

    • Calculation: $162,785 / $674,538 = 24.1%
    • Trend: Increase from 23.7% in the previous year (2024). Percentage change: 1.7%
    • Industry: The industry average gross profit margin for discount stores and supercenters is typically between 22% and 28%. Walmart’s GPM is within this range.
  • Metric: Operating Profit Margin

    • Calculation: $29,348 / $674,538 = 4.4%
    • Trend: Increase from 4.2% in the previous year (2024). Percentage change: 4.8%
    • Industry: The industry average operating profit margin for retailers is typically between 3% and 6%. Walmart’s OPM is within this range.
  • Metric: Net Profit Margin

    • Calculation: $20,157 / $674,538 = 3.0%
    • Trend: Increase from 2.5% in the previous year (2024). Percentage change: 20%
    • Industry: The industry average net profit margin for retailers is typically between 1% and 4%. Walmart’s NPM is within this range.
  • Metric: Return on Assets (ROA)

    • Calculation: $20,157 / $256,611 = 7.9%
    • Trend: Increase from 6.6% in the previous year (2024). Percentage change: 19.7%
    • Industry: The industry average ROA for retailers is typically between 3% and 8%. Walmart’s ROA is within this range.
  • Metric: Return on Equity (ROE)

    • Calculation: $19,436 / $97,421 = 19.95%
    • Trend: Increase from 17.17% in the previous year (2024). Percentage change: 16.2%
    • Industry: The industry average ROE for retailers is typically between 10% and 20%. Walmart’s ROE is within this range.
  • Metric: Earnings Per Share (EPS) – Basic and Diluted

    • Basic EPS Calculation: $19,436 / 8,041 = $2.42
    • Diluted EPS Calculation: $19,436 / 8,081 = $2.41
    • Trend: Basic EPS increased from $1.92 in the previous year (2024). Percentage change: 26%. Diluted EPS increased from $1.91 in the previous year (2024). Percentage change: 26.2%
    • Industry: The EPS varies significantly across the retail industry.

Liquidity

  • Metric: Current Ratio

    • Calculation: $79,458 / $96,584 = 0.82
    • Trend: Increase from 0.83 in the previous year (2024). Percentage change: -1.2%
    • Industry: The industry average current ratio for retailers is typically between 1.0 and 2.0. Walmart’s current ratio is below this range.
  • Metric: Quick Ratio (Acid-Test Ratio)

    • Calculation: ($79,458 – $56,435) / $96,584 = 0.24
    • Trend: Decrease from 0.22 in the previous year (2024). Percentage change: 9%
    • Industry: The industry average quick ratio for retailers is typically between 0.2 and 1.0. Walmart’s quick ratio is within this range.
  • Metric: Cash Ratio

    • Calculation: $9,037 / $96,584 = 0.09
    • Trend: Decrease from 0.11 in the previous year (2024). Percentage change: -18%
    • Industry: The industry average cash ratio for retailers is typically between 0.05 and 0.2. Walmart’s cash ratio is within this range.

Solvency/Leverage

  • Metric: Debt-to-Equity Ratio

    • Calculation: $35,999 / $97,421 = 0.37
    • Trend: Decrease from 0.44 in the previous year (2024). Percentage change: -15.9%
    • Industry: The industry average debt-to-equity ratio for retailers is typically between 0.5 and 1.5. Walmart’s debt-to-equity ratio is below this range.
  • Metric: Debt-to-Assets Ratio

    • Calculation: $35,999 / $260,823 = 0.14
    • Trend: Decrease from 0.16 in the previous year (2024). Percentage change: -12.5%
    • Industry: The industry average debt-to-assets ratio for retailers is typically between 0.3 and 0.6. Walmart’s debt-to-assets ratio is below this range.
  • Metric: Interest Coverage Ratio (Times Interest Earned)

    • Calculation: $29,348 / $2,245 = 13.1
    • Trend: Increase from 12.6 in the previous year (2024). Percentage change: 4%
    • Industry: The industry average interest coverage ratio for retailers is typically between 3 and 6. Walmart’s interest coverage ratio is above this range.

Activity/Efficiency

  • Metric: Inventory Turnover

    • Calculation: $511,753 / $56,435 = 9.1
    • Trend: Increase from 8.9 in the previous year (2024). Percentage change: 2.2%
    • Industry: The industry average inventory turnover for retailers is typically between 4 and 6. Walmart’s inventory turnover is above this range.
  • Metric: Days Sales Outstanding (DSO)

    • Calculation: ($9,975 / $674,538) * 365 = 5.4 days
    • Trend: Increase from 5.0 days in the previous year (2024). Percentage change: 8%
    • Industry: The industry average DSO for retailers is typically between 30 and 45 days. Walmart’s DSO is below this range.
  • Metric: Days Payable Outstanding (DPO)

    • Calculation: ($58,666 / $511,753) * 365 = 41.7 days
    • Trend: Increase from 40.3 days in the previous year (2024). Percentage change: 3.5%
    • Industry: The industry average DPO for retailers is typically between 30 and 50 days. Walmart’s DPO is within this range.
  • Metric: Asset Turnover

    • Calculation: $674,538 / $256,611 = 2.6
    • Trend: Increase from 2.6 in the previous year (2024). Percentage change: 0%
    • Industry: The industry average asset turnover for retailers is typically between 1.0 and 2.0. Walmart’s asset turnover is above this range.

Valuation

  • Metric: Price-to-Earnings Ratio (P/E)

    • Calculation: $85.35 / $2.41 = 35.4
    • Trend: N/A
    • Industry: The industry average P/E ratio for retailers is typically between 15 and 25. Walmart’s P/E ratio is above this range.
  • Metric: Price-to-Book Ratio (P/B)

    • Calculation: ($8,024 * $85.35) / $97,421 = 7.0
    • Trend: N/A
    • Industry: The industry average P/B ratio for retailers is typically between 1 and 3. Walmart’s P/B ratio is above this range.
  • Metric: Price-to-Sales Ratio (P/S)

    • Calculation: ($8,024 * $85.35) / $674,538 = 1.0
    • Trend: N/A
    • Industry: The industry average P/S ratio for retailers is typically between 0.5 and 1.5. Walmart’s P/S ratio is within this range.
  • Metric: Enterprise Value to EBITDA (EV/EBITDA)

    • Calculation: Market Cap = 8,024 * $85.35 = $684,845.4 million. EBITDA = $29,348 + $12,973 = $42,321 million. EV = $684,845.4 + $35,999 – $9,037 = $711,807.4 million. EV/EBITDA = $711,807.4 / $42,321 = 16.8
    • Trend: N/A
    • Industry: The industry average EV/EBITDA ratio for retailers is typically between 8 and 12. Walmart’s EV/EBITDA ratio is above this range.

Growth Rates

  • Metric: Revenue Growth

    • Calculation: ($674,538 – $642,637) / $642,637 = 5.0%
    • Trend: N/A
    • Industry: The industry average revenue growth for retailers is typically between 2% and 4%. Walmart’s revenue growth is above this range.
  • Metric: Net Income Growth

    • Calculation: ($20,157 – $16,270) / $16,270 = 23.9%
    • Trend: N/A
    • Industry: The industry average net income growth for retailers is typically between 5% and 10%. Walmart’s net income growth is above this range.
  • Metric: EPS Growth

    • Calculation: ($2.41 – $1.91) / $1.91 = 26.2%
    • Trend: N/A
    • Industry: The industry average EPS growth for retailers is typically between 5% and 10%. Walmart’s EPS growth is above this range.

Other Relevant Metrics

  • Analysis of Share Repurchases:

    • During fiscal year 2025, Walmart repurchased 61.9 million shares at an average price of $72.72 per share, totaling $4,494 million. This compares to 54.6 million shares repurchased in fiscal year 2024 at an average price of $50.87 per share, totaling $2,779 million. The increased repurchase activity suggests a strategic effort to return value to shareholders and potentially signal management’s confidence in the company’s future prospects.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️