WMT

We rate Walmart Inc. (WMT) as a Hold with a composite score of 60.4/100 at a current price of $126.80. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in stability (87th percentile) and momentum (75th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (32th percentile) and value (43th percentile) tempers our overall conviction. We assign a Narrow Moat rating (43/100), Medium uncertainty, and Standard capital allocation.

Key items to watch: balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Walmart Inc. holds a mid-tier position (#33 of 50) within the Retail Trade sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 60.4/100 places it at rank #655 in our full 7,333-stock universe. As a mega-cap company with a $806.7B market capitalization, Walmart Inc. benefits from significant scale, distribution networks, and brand recognition that smaller competitors cannot easily replicate.

The outlook is moderately positive, with revenue expanding at 6% and favorable momentum (75th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 25% (-11.1pp vs sector) narrow to operating margins of 4% (+0.1pp vs sector) and net margins of 3.6%, yielding a gross-to-net conversion rate of 14%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $126.80, Walmart Inc. is trading near fair value based on current fundamentals. Our value factor score of 43/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 39.2x (a 83% premium to the sector median of 21.4x), EV/EBITDA of 28.3x (at a premium), P/B of 9.6x, P/S of 1.4x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Medium uncertainty rating to Walmart Inc.. The stock presents a balanced risk profile: significant leverage (182% debt-to-equity) and low beta of 0.53 — while defensive, this may indicate limited upside participation in bull markets. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: significant leverage (182% debt-to-equity); low beta of 0.53 — while defensive, this may indicate limited upside participation in bull markets; the combination of leverage (182% D/E) and thin margins (3.6% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 87th percentile and quality factor at the 58th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (87th percentile) suggests predictable business dynamics; large-cap scale ($806.7B) provides resilience. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Walmart Inc.'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 24.5%, and the balance sheet is managed within acceptable parameters (D/E: 182%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; Walmart Inc. falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 0.90% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, Walmart Inc. receives a Hold rating with a composite score of 60.4/100 (rank #655 of 7,333). Our quantitative framework assigns a Narrow Moat (43/100, trend: stable), Medium uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 59/100.

Our analysis supports a neutral stance on Walmart Inc.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.