Walmart Inc.

All tables: FY2022 (yr ended 31 Jan 2022) through FY2026 (yr ended 31 Jan 2026). Sources: FY2026 Form 10-K and ARS; Q4 FY26 earnings release (8-K, 19 Feb 2026); FY2024 Form 10-K; FY2025 ARS.

Income statement: notes and sources

EPS and per-share dividends for FY2022–FY2024 are presented on a post-split basis reflecting the 3-for-1 split effected 26 February 2024. FY2022 loss on extinguishment of debt of $2,410M is presented as a separate line consistent with the FY2023 10-K.

Profitability ratios (%): notes and sources

(derived; margins computed on net sales, consistent with company presentation)

Growth rates and compound annual growth (%): notes and sources

(derived): ### Balance sheet: notes and sources

FY2025 and FY2026 balance sheet lines are taken directly from the Q4 FY26 earnings release condensed balance sheets and reconcile to the disclosed $51.5bn total debt at 31 January 2026.

At 30 April 2026 the balance sheet had extended further: total assets $289,607M; cash $10,729M; inventories $62,570M (+8.9% YoY); short-term borrowings $10,673M; long-term debt $36,887M; total debt $58.1bn (company-disclosed); total Walmart shareholders' equity $94,330M (reduced by the $5,921M dividend payable accrued in the quarter).

Cash flow: notes and sources

FY2022–FY2023 capex confirmed via the FY2024 10-K segment capital-expenditure disclosure. The FY2026 total of $15,595M reconciles exactly to the $15.6 billion returned to shareholders cited in the 2026 proxy.

Additional FY2026 cash flow items: proceeds from disposal of strategic investments $927M; payments for business acquisitions net of cash acquired $53M; proceeds from issuance of long-term debt $3,983M; repayments of long-term debt $2,625M; dividends paid to non-controlling interests $439M.

Return, leverage and efficiency ratios: notes and sources

(all derived; ROE, ROA and asset turnover use two-point averages. ROIC is analyst-computed as NOPAT over total debt plus equity less cash and differs by definition from the company's own ROI metric.)

Company-reported return metrics (10-K/8-K basis):

Source: Q4 FY26 and Q1 FY27 earnings releases. The FY2026 ROI was negatively affected by approximately 35 bps from discrete items; the Q1 FY27 TTM ROI by approximately 45 bps.

Commentary — trends, inflections and drivers

Revenue. Net sales compounded at 5.62% over four years, from $567.8bn to $706.4bn, crossing $700 billion for the first time in FY2026. The trajectory decelerated steadily — 6.71%, 6.07%, 4.96%, 4.73% — but the deceleration is misleading in two respects. First, FY2025 contained a 53rd week; FY2026 did not, so the FY2026 comparison faces a lapping headwind. Second, constant-currency net sales growth in FY2026 was 5.1%, versus 4.7% reported, because currency translation was a $2.75bn headwind for the year. Underlying volume was strong: FY2026 growth was driven by increases in both average ticket and transactions, and by unit growth.

The FY2023 profit trough and what it teaches. Operating income collapsed 21.3% in FY2023 to $20.4bn, and the effective tax rate spiked to 33.6%. Both were driven by the same event: the approximately $3.3 billion opioid settlement accrual recorded in Corporate and support, which drove segment-level Corporate expense to negative $6,249M — three times its normal run rate — and which was substantially non-deductible. This is the single most important discontinuity in the five-year series and the reason all growth rates measured from FY2023 look artificially strong. The liability was fully paid as of 31 January 2025.

The margin story is a mix story, not a pricing story. Gross margin expanded 77 bps from the FY2023 trough (23.46%) to FY2026 (24.21%) — but almost all of that came back in operating expense, which rose from 20.38% of net sales in FY2024 to 20.94% in FY2026. Operating margin therefore fell 13 bps in FY2026 to 4.22%. What actually improved was the quality of the gross margin: advertising recorded as a reduction of cost of sales, improving e-commerce unit economics as delivery density rose, and membership fee growth. Management's own framing — "operating income growing faster than sales for the third consecutive year" — is true on an adjusted constant-currency basis (+5.4% versus +5.1% net sales) but false on a reported basis (+1.6% versus +4.7%). The gap is the PhonePe charge, legal matters and reorganisation costs.

Net income has outrun operating income by a wide margin, compounding at 12.49% versus 3.55%. Roughly half of that gap is genuine — a falling effective tax rate (25.4% to 24.4%, with a 23.4% low in FY2025) and better mix. The other half is not operating at all: "Other (gains) and losses" swung from a $3,027M charge in FY2024 to a $2,075M gain in FY2026, a $5.1 billion swing driven by mark-to-market on Walmart's equity and other investments. Management itself excludes this from adjusted EPS precisely because it is not forecastable. Analysts should treat the FY2026 net income of $21.9bn as containing roughly $2.1bn of non-operating investment gains. Reported Q4 FY26 EPS of $0.53 against adjusted EPS of $0.74 — a 28% gap — makes the point starkly: the same investment portfolio that added to the full year subtracted $0.21 in the fourth quarter.

Capital intensity has stepped up decisively. Capex rose from 2.31% of net sales in FY2022 to 3.77% in FY2026 — an absolute doubling from $13.1bn to $26.6bn. FY2026 alone added $2.9bn. The composition matters: the largest share remains U.S. "supply chain, customer-facing initiatives, technology and other," up nearly 13% in FY2026, but the fastest-growing line was new stores and clubs including expansions and relocations, up roughly 212% to about $1.4 billion, building on 500% growth the prior year. After roughly a decade of net U.S. store-count stasis, Walmart has restarted physical expansion — a strategically significant reversal, and one that is rational only if stores are understood as fulfilment nodes rather than retail boxes.

Free cash flow is the pressure point. Operating cash flow rose 14.1% to a record $41.6bn in FY2026, yet free cash flow of $14.9bn remains below the $15.1bn achieved in FY2024, because capex has grown faster than operations. FCF conversion of net income fell from 106% in FY2023 to 67% in FY2026. Q1 FY2027 made this vivid: operating cash flow fell $0.7bn to $4.7bn while capex rose $1.7bn to $6.7bn, producing negative $1.9 billion of free cash flow versus positive $425 million a year earlier. Management attributes the inventory build (+8.9%, +7.8% cc) to receipt timing, grocery unit demand and fuel — plausible, but it warrants monitoring at Q2.

Working capital remains structurally negative and is becoming more so — from negative $6.3bn in FY2022 to negative $22.6bn in FY2026 — which is a feature, not a defect. The cash conversion cycle compressed to 2.8 days, from 6.4 days in FY2022, meaning Walmart now converts inventory to cash almost exactly as fast as it pays suppliers. Every incremental dollar of sales is self-financing. Note, however, that the current ratio has fallen to 0.79 and short-term borrowings quintupled from $1.1bn (FY2024 including current LTD would be higher) to $6.6bn at FY2026 and $10.7bn at April 2026 — Walmart is running a materially more levered short-term funding structure than three years ago, comfortably supported by its AA/Aa2 ratings but a change worth naming.

Leverage remains conservative at 0.93x net debt to EBITDA and 12.3x interest coverage, well inside the below-2.0x threshold Morningstar DBRS identified as its downgrade trigger. Total debt rose 12.5% in FY2026 to $51.5bn and to $58.1bn by April 2026, funding the step-up in capex and the accelerated buyback — a deliberate, ratings-consistent releveraging rather than distress.

Management guidance

For fiscal 2027, management guides constant-currency net sales growth of 3.5–4.5%, constant-currency adjusted operating income growth of 6.0–8.0%, adjusted EPS of $2.75–2.85, an effective tax rate of 23.5–24.5%, net interest expense up approximately $200–300 million, and capital expenditure of approximately 3.5% of net sales (implying roughly $25–27 billion). The guidance was reiterated unchanged on 21 May 2026 and explicitly excludes any impact from IEEPA tariff refunds. For Q2 FY2027, guidance is 4.0–5.0% constant-currency net sales growth, 7.0–10.0% constant-currency operating income growth, and adjusted EPS of $0.72–0.74.

The through-line of this guidance is the financial framework management has repeated for three years: operating income compounds faster than sales, funded by mix shift into advertising, membership, marketplace and fulfilment services rather than by merchandise pricing.

Consensus expectations

Consensus for Q2 FY2027 sits at approximately $0.73 adjusted EPS on approximately $186.3 billion of revenue — squarely inside guidance. The 48-analyst average price target of approximately $138.7 implies roughly 20% upside from $115.72, with 86–89% of covering analysts constructive. Jefferies, RBC and Piper Sandler have all reiterated buy-equivalent ratings in August 2026; Bernstein trimmed its target to $142 from $145 while retaining Outperform.

Bull case

1. The mix shift is real, is accelerating, and is barely started. Global advertising grew 46% in FY2026 to nearly $6.4 billion and 37% again in Q1 FY2027; membership fees grew 15.5% and then 17.4%; marketplace grew nearly 50% in Q1 FY2027, the best in ten quarters. Together these represent well under 2% of net sales. Mature marketplace-plus-media platforms monetise at mid-single-digit take rates. Each incremental point of advertising penetration on a $706 billion revenue base is worth several billion dollars of near-pure operating profit — enough on its own to deliver the guided 6–8% operating income growth without any help from merchandise.

2. E-commerce has crossed into structural profitability, and the physical estate is the reason. Walmart U.S. e-commerce grew 23% to $99.6 billion while segment operating income grew faster than sales, aided by "improved eCommerce economics." Jefferies' formulation — incremental e-commerce dollars carry higher margin than store dollars as routing, batching and express fees scale — inverts a decade of received wisdom. With expedited store-fulfilled delivery growing 50–70% and roughly a third of U.S. online orders fulfilled from stores in under three hours, Walmart has converted 4,611 stores from a legacy cost base into the cheapest last mile in American retail. This asset cannot be replicated at any price.

3. Agentic commerce is being met, not merely feared. Sparky users show approximately 35% higher average order value; units purchased through Sparky more than quadrupled quarter-on-quarter into Q1 FY2027; the assistant now runs inside ChatGPT with account linking, loyalty and payment; ads run inside the agent. Walmart deliberately designed Sparky to interoperate rather than lock in, and partnered with both OpenAI and Alphabet. Furner's framing — Sparky "connects digital intent to fulfilment through forward-deployed inventory and 1.5 million associates" — describes an advantage Amazon's Rufus structurally cannot match: no other agent sits on top of a store network within reach of nearly every American household.

Bear case

1. Free cash flow is going the wrong way, and the capex is not optional. FY2026 free cash flow of $14.9 billion is below FY2024's $15.1 billion despite $5.9 billion more operating cash flow. Q1 FY2027 free cash flow was negative $1.9 billion on 34% capex growth. Company-reported ROI fell to 15.1% in FY2026 and 14.9% on a TTM basis at April 2026, from 15.3%. Guidance holds capex at approximately 3.5% of net sales indefinitely. If automation, delivery and store investment do not lift operating margin above the 4.22% achieved in FY2026 — and it fell 13 bps in FY2026 — then Walmart has permanently converted a high-free-cash-flow business into a capital-intensive one at a 40x multiple.

2. The core franchise is showing its first genuine cracks. Grocery growth decelerated to 3.4% from 4.5%, and Numerator data indicates a slight decline in overall grocery share. Sam's Club U.S. grew net sales 3.1% and operating income 1.6% against Costco's 8–9%, with roughly half of Costco's new sign-ups coming from members under 40. Amazon has taken the world's-largest-company-by-revenue title. And on 21 May 2026 the shares fell 7.3% on a quarter that beat on both revenue and adjusted EPS — the clearest possible evidence that the multiple, not the operations, is now the binding constraint.

3. Reported earnings quality is materially worse than adjusted earnings suggest. FY2026 net income of $21.9 billion includes roughly $2.1 billion of non-operating investment gains from the "Other (gains) and losses" line, which swung $5.1 billion favourably against FY2024. Reported operating income grew 1.6%; adjusted constant-currency operating income grew 5.4% — and executive incentives were paid against the latter. Q4 FY26 GAAP EPS of $0.53 versus adjusted $0.74 is a 28% gap. Strip out the marks, the currency, the PhonePe charge, the legal reversals and the reorganisation charges, and the underlying business grew operating income by low-to-mid single digits on 4.7% sales growth — which is not obviously a 40x business.

Catalysts and monitorables — next twelve months

Analyst verdict

Walmart is executing a genuine business-model transformation and is being asked to pay for it twice — once in capital expenditure, and once in a valuation that already assumes the transformation succeeds.

The operational case is strong and improving. Net sales passed $700 billion; global e-commerce reached $150.4 billion at 24% growth and is now structurally profitable on the margin; advertising grew 46%; membership fees grew 15.5%; marketplace grew nearly 50% in the most recent quarter. Management has converted 4,611 U.S. stores from a legacy liability into the cheapest last mile in American retail, and has met the agentic-commerce threat by building Sparky, partnering with both OpenAI and Alphabet, and placing its own storefront inside ChatGPT. The balance sheet is a fortress — AA/Aa2, 0.93x net debt to EBITDA, a self-financing negative working capital position, and a $30 billion buyback with $28.2 billion remaining. The February 2026 leadership cascade was planned, internal and orderly.

The counterweight is arithmetic. Reported operating margin fell 13 bps in FY2026. Free cash flow of $14.9 billion is still below FY2024's, and turned negative in Q1 FY2027. Company-reported ROI declined to 14.9%. Roughly $2.1 billion of FY2026 net income came from investment marks, and executive incentives were paid on adjusted figures 380 bps of growth above the reported result. Grocery share is drifting down. Amazon has taken the revenue crown.

At roughly 40x earnings for a 4–5% top-line grower, the equity is priced for the mix shift to deliver — which the company itself flags as its principal financial risk. A 7.3% decline on an earnings beat in May 2026 is the market beginning to test that. Verdict: an exceptional business at a demanding price. Own the operations; respect the multiple. The Q2 print on 20 August 2026, and specifically the free-cash-flow and second-half-guidance lines, is the near-term arbiter.

APPENDIX — DATA GAPS AND VERIFICATION NOTES

The following items were sought but not obtained in this research pass and should be sourced directly before any figure is relied upon in a transaction context:

1. FY2022 segment operating income by segment (FY2022/FY2023 Forms 10-K).

2. Full debt maturity ladder by year (FY2026 10-K debt note).

3. Complete 2026 director slate with tenures, ages, committee memberships and independence determinations, and the identity of the Lead Independent Director (DEF 14A, 23 April 2026).

4. Summary Compensation Table detail resolving the Daniel Danker inducement-award discrepancy ($37.7m vs $20m).

5. MSCI, Sustainalytics and CDP current ESG ratings.

6. Three-year and five-year total shareholder returns.

7. FY2026 income taxes paid and interest paid (cash flow supplemental disclosure).

8. Patent portfolio size and recent grant counts — believed not publicly disclosed by Walmart in any form.

9. Walmart+ membership pricing — not disclosed in the Form 10-K.

10. Country-level revenue below segment — not publicly disclosed; Mexico/Central America ($52bn) and China ($20bn) figures above are third-party estimates.

11. Exact date of the NYSE-to-Nasdaq listing transfer.

12. R&D expense — not separately disclosed in Walmart's financial statements; no reliable figure exists.

Noted source conflicts, unresolved: (i) Walmart's PhonePe stake, reported at both approximately 71.8% and approximately 85%; (ii) PhonePe IPO target valuation, reported at approximately $15 billion (January 2026) and $9–10.5 billion (March 2026); (iii) Walton family total ownership, reported at approximately 44%, 45% and "nearly 46%"; (iv) global e-commerce as a share of net sales, stated at 23% in the shareholder letter versus 21.3% derived from segment disclosures; (v) Walmart U.S. FY2026 comparable sales, stated at 4.3% (annual report / proxy, 4-5-4 basis) versus 4.6% (earnings release, 52-week ex-fuel basis); (vi) U.S. tariff exposure, characterised by one third-party filing summary as approximately 82% of U.S. segment net sales versus the company's own Q1 FY2027 10-Q statement that less than one-third of U.S. merchandise is imported; (vii) Maximum Fair Price impact, cited at approximately 200 bps on Walmart U.S. health and wellness comps (company, Q4 FY26) versus 700 bps (third-party analysis).

End of dossier.