Walmart Inc (NASDAQ:WMT) Passes the Caviar Cruise Quality Investing Screen

Last update: Dec 11, 2025

For investors looking to assemble a collection of lasting, well-managed companies able to increase wealth over many years, the quality investing method provides a structured system. This system, influenced by ideas from sources like Luc Kroeze's "The Caviar Formula," centers on finding businesses with durable competitive positions, reliable earnings, and sound financial condition. It looks past basic valuation measures to emphasize the inherent durability and long-term nature of a business. A primary instrument in this process is the "Caviar Cruise" stock screen, which uses measurable criteria for sales increase, earnings caliber, and capital use to find possible long-term investments.

One business that presently satisfies the basic form of this screen is Walmart Inc (NASDAQ:WMT). The large retailer's presence on this list prompts a more detailed look at how its basic traits match the ideas of quality investing.

Satisfying the Caviar Cruise Standards

The Caviar Cruise screen employs a series of step-by-step filters meant to find companies with a record of earnings growth and effective capital employment. Walmart's recent financial information illustrates how it meets these particular tests:

Earnings Growth Surpassing Sales: A main screen filter demands that a company's five-year EBIT (earnings before interest and taxes) growth be greater than its sales growth. This signals better operational performance and pricing ability. For Walmart, the five-year EBIT compound annual growth rate (CAGR) of 6.45% is higher than its sales CAGR of 4.47%, showing that a larger part of its rising sales is becoming operating profit.
Strong Return on Invested Capital: Possibly the most important measure for quality investors, ROIC calculates how well a company produces earnings from its capital. The screen requires a ROIC (leaving out cash, goodwill, and intangibles) over 15%. Walmart's result of 15.41% not only meets this level but also beats a large portion of its competitors in the Consumer Staples Distribution & Retail industry, indicating a lasting competitive edge from its enormous size and distribution system.
Reasonable Debt and Sound Earnings: The screen assesses financial security and the "cash truth" of earnings. Walmart's Debt-to-Free Cash Flow ratio of 3.48 shows it could pay off all its debt with under three and a half years of present cash flow, indicating a solid financial position. Also, its five-year average Profit Quality, which contrasts free cash flow with net income, is a very high 110.16%. This means Walmart has reliably turned all its reported profits into actual cash, and more, a sign of financial sound and reliable earnings.

A Review of Walmart's Basic Profile

A wider view of Walmart's detailed basic analysis report supports its standing as a quality possibility, although with some recognized balances. The report gives Walmart a total score of 5 out of 10, noting a varied situation.

Advantages in Earnings and Condition: The company achieves its best scores in Earnings (7/10), with good returns on assets, equity, and invested capital that place it near the top in its field. Its financial condition score (5/10) is supported by a very secure Altman-Z score and the reasonable debt level mentioned before, although it is affected by lower short-term liquidity ratios common in the inventory-intensive retail industry.
Growth and Price Factors: Walmart's growth score is average (4/10), indicating consistent but moderate past and projected future growth in both sales and earnings. The most notable point of caution for investors now is price, where the stock scores a 1/10. Its present Price-to-Earnings ratio is much higher than both its industry norm and the wider S&P 500, implying the market has already accounted for its quality and stable nature.

Is Walmart a Quality Investment?

Using the Caviar Cruise system shows that Walmart has several core features quality investors want: a long-term pattern of better earnings, a high and sector-leading return on capital, a solid financial position, and outstanding cash generation. These measures indicate a mature, well-run business with a strong competitive position.

Still, the quality investing idea also requires assessment beyond the figures. Walmart's business, basic retail, is straightforward to grasp and shows stability through different economic periods. Its worldwide size gives it leverage with suppliers, and its large spending on online sales and logistics modernization seeks to protect its competitive edge for coming years.

For investors employing a screen like Caviar Cruise as an initial step, Walmart serves as a clear case of a business that meets strict measurable tests for company quality. The screen effectively found a leading company with lasting competitive strengths and financially stable operations.

You can review the present list of businesses satisfying the Caviar Cruise screen and use its filters yourself here: Caviar Cruise Stock Screener.

Disclaimer: This article is for information and learning only. It is not investment guidance, a suggestion, or an offer to purchase or sell any security. The data and study provided are from sources thought to be dependable, but their correctness is not assured. Investors should perform their own research and seek advice from a registered financial advisor before making any investment choices.