Can Walmart Stock Hit a $1 Trillion Market Cap in 2025?
Wednesday, Jan 1, 2025 5:50 am ET
4min read Walmart Inc. (WMT) has been on a tear in recent years, with its stock price soaring by more than 70% in 2024 alone. This impressive performance has pushed the company's market cap to around $730 billion, leaving investors wondering if the retail giant can reach the coveted $1 trillion mark in 2025. In this article, we'll explore the fundamentals, growth prospects, and valuation of Walmart stock to determine the likelihood of it hitting the $1 trillion milestone.
Fundamentals and Growth Prospects
Walmart's business has been steady and resilient, with the company finding ways to grow its sales by single-digit percentages in a challenging retail environment. Through the first nine months of fiscal 2025, Walmart's sales rose by over 5% to $500.4 billion, and its operating income increased by nearly 9% to $21.5 billion. These stable results, combined with the company's acquisition of TV maker Vizio, present a potential growth catalyst for Walmart's business.
The Vizio acquisition gives Walmart access to Vizio's SmartCast platform, which has over 19 million active accounts. This opportunity allows Walmart to expand its advertising business into streaming and rake in more sales. As Walmart integrates Vizio's platform with its own, it can offer targeted advertising and promotions, reaching a broader audience and driving more traffic to its e-commerce platform.
VZ Operating Profit Margin, Total Revenue
| Name |
|---|
| Date |
| Operating Profit Margin% |
| Total Revenue(USD) |
| VerizonVZ |
| 2024 Q3 |
| 16.41 |
| 33.33B |
Valuation and Market Cap Growth
One possible impediment to Walmart's market cap growth is its valuation. The company's stock is currently trading at a premium compared to its peers, with a P/E ratio of 37.33 and an EV/EBITDA ratio of 17.5. While Walmart deserves a premium for its steady growth and strong fundamentals, the bullishness in the markets has pushed its price tag to a level that might be too rich for some investors.
To reach a $1 trillion market cap, Walmart's stock would need to rise by approximately 37% from its current level of $90.35. Assuming its earnings per share (EPS) remain constant, the new P/E ratio would be around 51.18, placing Walmart's valuation higher than its current level and higher than its peers. This suggests that investors would be paying a premium for Walmart's stock, reflecting the company's strong performance and growth prospects.
Conclusion
Walmart's expansion into streaming advertising through the Vizio acquisition, combined with its strong fundamentals and growth prospects, makes it a compelling candidate to hit the $1 trillion market cap milestone in 2025. However, the company's valuation is already at a premium, and investors may demand a lower P/E multiple if Walmart fails to meet growth expectations or faces challenges in the retail environment. To achieve this goal, Walmart must continue to innovate, adapt to changing consumer preferences, and maintain its focus on cost management and operational efficiency.
In the end, the market will ultimately decide whether Walmart can reach the $1 trillion mark in 2025. But with its strong fundamentals, growth prospects, and strategic acquisitions, Walmart is well-positioned to make a run at this impressive milestone.
