Will Walmart Become a $1 Trillion Retail Giant by 2025?
Walmart (NYSE: WMT) has had an impressive year, soaring more than 70% in 2024, far exceeding the S&P 500‘s 24% gain. As a result, its market capitalization reached approximately $730 billion. This article examines the likelihood of Walmart’s stock reaching the $1 trillion mark in 2025 based on its performance and growth prospects.
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Stable Sales with Promising Growth Ahead
Over the past year, Walmart’s sales growth has been modest, reflecting a gain of just over 5% to $500.4 billion through the first nine months of fiscal 2025, which ended on October 31. Operating income also increased by nearly 9% to $21.5 billion. This steady performance stands out when many retailers struggle to maintain customer loyalty amidst rising costs.
Walmart has remained a convenient option for shoppers who prefer a one-stop shop for groceries and everyday items. Rising prices at discount retailers due to inflation have led consumers to reevaluate their shopping options, making Walmart increasingly appealing.
A significant driver of future growth may stem from Walmart’s recent acquisition of TV maker Vizio, closed in early December. This deal allows Walmart to connect with customers through Vizio’s SmartCast platform, which boasts over 19 million active accounts. This acquisition opens new avenues for Walmart’s advertising revenue and could boost sales considerably.
Is Walmart’s Stock Price Too High?
Walmart’s significant stock price increase has brought its valuation under scrutiny. Presently, shares trade at 37 times their trailing earnings, placing them at the higher end of the retail sector, alongside Costco Wholesale.
WMT PE Ratio data by YCharts
The question remains whether this premium is warranted. While Walmart shows consistent growth and profit increases, it has yet to deliver the explosive growth often expected with such high earnings multiples. Despite its strong position, some investors crave more dynamic growth before justifying the elevated price.
Walmart Has Potential to Reach $1 Trillion, But Timing Is Key
To achieve a $1 trillion market cap, Walmart would need a 37% increase from its current valuation. This would likely require another year of outperforming market expectations. Although Walmart has various growth strategies, it may be unrealistic to expect substantial earnings increases this year, suggesting that reaching the $1 trillion milestone could take longer than 2025.
Long-term investors may still find value in Walmart’s shares. Though a slowdown may be on the horizon, Walmart remains a quality investment with significant growth potential.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Best Buy, Costco Wholesale, Home Depot, Target, and Walmart. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
