Frank Curzio
Founder & CEO of Curzio Research, Wall Street Unplugged Host
Walmart's 43.28x earnings multiple makes the stock impossible to buy for a long time. Its historical median is 31.13x, and even at 30x it would not be attractive. x.comÂ
Costco and Walmart's valuations have diverged from most US food and beverage stocks. Most of the group trades near 20-year valuation lows, while these two have entered a mini-bubble. x.comÂ
Walmart has the strongest fundamentals in retail, with $725B+ of revenue, exploding e-commerce and market-share gains while rivals bleed. It is a defensive cash-printing machine in a shaky economy, and analysts rate it a moderate buy with $140+ targets. x.comÂ
Walmart does not deserve 40x forward earnings, especially with comparable sales growth at its slowest in over six years. Per @negligible_cap, the stock fell 6% on decelerating comps and could eventually have a Target- or Nike-style moment as investors realize it can't hold that multiple forever. x.com x.comÂ
Walmart's 41x P/E looks hard to justify when gas prices are going through the roof. x.comÂ
Walmart may be setting up for a big bounce, with its pullback matching the pattern of its last two bottoms. The stock is down about 25% from its all-time high, as it was before both prior bottoms, which also showed RSI divergence. Its forward P/E has fallen from near 40 earlier this year to a more respectable 31, and it is holding just above the psychological $100 level near a prior breakout area. x.comÂ
Walmart looks expensive against its earnings at $110.12. It trades at 39x earnings and 34x next year's, while the industry usually gets 18x. Applying 18x to next year's $3.28 EPS, give or take 12%, gives a fair range of $51.95 to $66.12, putting the stock 67% above fair, with a PEG of 4.24. This is a levels-only read off reported earnings and revenue estimates, with no fundamental work. x.comÂ
High gasoline prices threaten Walmart's guidance. Gasoline is $5, making the expectation of great guidance pointedly doubtful. x.comÂ
Walmart keeps compounding through recessions because people never stop eating in bad years; they buy more chicken and less filet, and Walmart sells the chicken. It compounded through the 2001, 2008 and 2020 recessions. Wealth comes from finding a business that never has a truly bad year, not from moonshots. x.comÂ
Walmart's valuation looks like a bubble about to pop: investors pay 37x earnings for 6% revenue growth. Amazon is a more direct comparison and is way cheaper with roughly three times faster growth. x.com x.comÂ