Walmart(WMT) The Motley Fool·2025-01-24 09:41Core Viewpoint - Walmart has transformed from a traditional dividend-paying value stock to a high-growth stock, achieving a 71.9% surge in 2024, making it the second-best performer in the Dow Jones Industrial Average, raising questions about its ability to maintain this momentum in 2025 [1][2]. Group 1: Walmart's Performance and Strategy - Over the past five years, Walmart has navigated challenges such as the COVID-19 pandemic, supply chain issues, and inflation, while making significant investments to enhance its product offerings and convenience for consumers [3][4]. - Walmart's capital expenditures have significantly increased, focusing on new store openings, renovations, e-commerce, and technology investments, which have contributed to its recent success [4]. - The company has successfully attracted both low-income and higher-income consumers, gaining market share from competitors and achieving record revenue and profits despite challenges faced by other discount retailers [6][7]. Group 2: Financial Projections and Valuation - Analyst consensus estimates project Walmart's earnings per share (EPS) to be 2.76 for fiscal 2026, following a record high EPS of 1 trillion market cap, Walmart's stock price would need to rise to approximately $124.50 per share, requiring significant EPS growth [11]. Group 3: Dividend and Investment Considerations - Despite being a Dividend King with 51 consecutive years of dividend increases, Walmart's current yield is only 0.9%, lower than the S&P 500's yield of 1.2%, making it less attractive for passive income investors [14]. - Investors should anticipate a sizable dividend increase when Walmart releases its fiscal 2025 earnings, but it may take years for the stock to regain its status as a viable income stock [15]. - Given the stretched valuation, investors seeking passive income may find better opportunities in other high-yield dividend stocks with more favorable valuations [16][17].