Walmart: Back To Bubble Valuations Despite Weak Growth Prospects
Summary
- Walmart's PE ratio has surged to 33x, its highest since 2002, while the rise in capex has seen the price-to-free cash flow ratio rise above 50x.
- The company's earnings growth is unlikely to justify current valuations, amid the limited potential for significant sales growth amid rising competition and the company's already huge scale.
- Upside risks include continued multiple expansion and potential margin growth from high-margin segments like advertising, though these factors already appear priced in.
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Walmart (NYSE:WMT) has seen its share price surge over recent years, making it one of the best performing US mega cap stocks. However, in contrast to many other companies, Walmart's earnings growth has been poor, which has driven Walmart's PE ratio to
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