Walmart's stock faces challenges amid economic concerns

Walmart's stock had an excellent year in 2024, rising by 74% due to strong growth and earnings. However, the beginning of 2025 has been challenging. Shares are down about 19% from their peak, mainly because of weak forecasts from the company. Concerns about the U.S. economy are making investors nervous. Walmart is a leading global retailer, operating over 10,750 stores in 19 countries. The company has a loyal customer base drawn to its low prices. Its solid fundamentals suggest Walmart will continue to thrive. Yet, last year's strong performance may create high expectations that will be hard to meet again soon. In fiscal 2025, Walmart's sales grew by 5.6%. Adjusted earnings per share (EPS) rose by 13.1% to $2.51. The company benefited from a strong global economy and a better-than-expected U.S. consumer. Its e-commerce business also performed well, reporting a 20% sales increase in the last quarter. Despite last year's success, Walmart’s guidance for fiscal 2026 is less optimistic. The company expects sales growth to slow to between 3% and 4%, while the EPS forecast is lower than analyst expectations. This cautious outlook suggests Walmart may be facing some challenges in consumer spending. The current political landscape, including new trade tariffs, adds to the uncertainty. Changes in the labor market and interest rates could impact Walmart's supply chain, since it relies heavily on imports from countries like China. This unpredictability is contributing to a broader market decline. Walmart's stock price has corrected, trading at around 32 times its expected EPS for 2026, slightly above its average for the past five years. Looking ahead, Walmart's stock may remain volatile as the economic situation unfolds. While it might not be an immediate buy, there are reasons for investors to hold onto their shares. Overall, Walmart is in a strong position to handle various challenges and potentially reward its investors in the long term.