WALMART INC (NYSE:WMT) – A Quality Stock with Steady Growth and Strong Fundamentals

WALMART INC (NYSE:WMT) stands out as a potential candidate for quality investors, meeting key criteria from our Caviar Cruise screen. The company demonstrates consistent growth, strong profitability, and financial health, making it a noteworthy option for long-term investors. Below, we examine why WMT fits the quality investing profile.

Key Strengths of Walmart for Quality Investors

• Revenue and EBIT Growth: Over the past five years, WMT has delivered steady revenue growth (4.18% CAGR) and stronger EBIT growth (6.45% CAGR), indicating improving operational efficiency.
• High Return on Invested Capital (ROIC): With an ROIC of 17.65%, Walmart efficiently generates profits from its capital investments, outperforming many industry peers.
• Strong Free Cash Flow Conversion: The company’s five-year average profit quality (110.16%) shows it effectively converts net income into free cash flow, supporting financial flexibility.
• Manageable Debt Levels: A debt-to-free cash flow ratio of 3.91 suggests Walmart can comfortably service its debt, reinforcing financial stability.

Fundamental Analysis Summary

WMT scores well in profitability (8/10) with strong returns on equity and invested capital. Its financial health (5/10) is solid, though liquidity metrics are weaker. Valuation (1/10) remains a concern, as the stock trades at a premium compared to historical and industry averages. Growth prospects (4/10) are stable, with expected EPS growth of 9.02% annually.

For investors seeking quality stocks with reliable cash flows and competitive advantages, WMT presents a compelling case despite its valuation.

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Disclaimer

This is not investment advice. Always conduct your own research before making investment decisions.