Walmart Shares Sink on Soft Sales Forecast. Is It Time to Buy the Stock on the Dip?

Core Insights - Walmart's shares have seen a decline following a cautious outlook for 2025, despite a 65% increase over the past year [1] - The company reported a 4.1% revenue growth in Q4, reaching $180.6 billion, with adjusted EPS rising 10% to$ 0.66, surpassing analyst expectations [2] Sales Performance - U.S. store sales increased by 5% to $123.5 billion, with same-store sales up 4.6% excluding fuel [3] - E-commerce sales surged by 20%, driven by store-fulfilled pickup and delivery, advertising, and marketplace [3][4] Advertising and Marketplace Growth - Walmart Connect advertising revenue in the U.S. grew by 24% in the quarter, while online marketplace revenue soared by 37% [4] - The number of marketplace sellers utilizing advertising services increased by 50%, with nearly 45% of marketplace orders fulfilled by Walmart Fulfillment Services [4] Membership and Delivery Services - Walmart+ memberships grew by double digits, with significant increases in same-day delivery services [5] - The grocery category remains strong, with health and wellness sales boosted by GLP-1 weight-loss drugs [5] International Sales - International sales decreased by 0.7% to$ 32.2 billion, but increased by 5.6% in constant currencies, with strong growth in China, Mexico, and Canada [6] - International e-commerce sales rose by 4%, while advertising revenue increased by 10%, both impacted by a calendar shift related to Flipkart's event [6] Sam's Club Performance - Sam's Club revenue climbed 5.7% to $23.1 billion, with same-store sales up 6.8% [7] - E-commerce sales for Sam's Club increased by 24%, and memberships rose by 13% year over year [7] Future Guidance - Walmart forecasts fiscal 2026 revenue growth of 3% to 4% in constant currencies, with adjusted EPS expected between$ 2.50 to $2.60 [9] - For Q1, revenue growth is anticipated at 3% to 4%, with adjusted EPS between$ 0.57 to $0.58 [10] Market Dynamics - Upper-income households continue to drive growth, benefiting from same-day delivery services [12] - Grocery remains a core strength, with positive trends in pharmacy and general merchandise sales [13] Valuation Perspective - Walmart shares currently trade at a forward P/E ratio of approximately 35 times this year's analyst estimates, indicating a high valuation compared to historical levels [13] - Despite the recent pullback, the valuation appears elevated, suggesting a hold strategy rather than new positions [14]