WALMART INC (NYSE:WMT) – A Quality Stock with Consistent Performance

WALMART INC (NYSE:WMT) stands out as a candidate for quality investors, meeting key criteria in profitability, financial health, and growth stability. The company’s fundamentals align with the Caviar Cruise screen’s focus on durable businesses with strong operational performance. Below, we examine why WMT fits this strategy.

Key Strengths

• Revenue and EBIT Growth: WMT has delivered steady revenue growth, with a 5-year CAGR of 4.08%. EBIT growth (6.45% CAGR) outpaces revenue, reflecting improving operational efficiency.
• High ROIC: The Return on Invested Capital (excluding cash and goodwill) is 17.65%, well above the 15% threshold for quality stocks, indicating effective capital allocation.
• Strong Profit Quality: Over the past five years, WMT converted 110% of net income into free cash flow, exceeding the 75% benchmark. This suggests reliable earnings and cash generation.
• Manageable Debt: The Debt-to-Free Cash Flow ratio of 3.91 means WMT could repay its debt in under four years using current cash flows, signaling financial flexibility.

Fundamental Snapshot

WMT’s profitability is a standout, with an 8/10 rating. It outperforms peers in operating margin (4.33%) and ROIC (13.57%). However, its valuation is elevated, with a P/E of 39.59, which may deter value-focused investors. Liquidity metrics like the current ratio (0.78) are weaker, though solvency remains solid with a healthy Altman-Z score (6.05).

Why It Fits Quality Investing

WMT’s global scale, pricing power, and consistent dividend history (10+ years without cuts) align with quality investing principles. While near-term valuation is high, its long-term fundamentals—such as stable growth and high cash conversion—support a buy-and-hold approach.

For more quality stock ideas, explore the Caviar Cruise screener.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should conduct your own analysis before making investment decisions.