Do Walmart’s (NYSE:WMT) earnings deserve your attention?

The thrill of investing in a company that can turn around its fortunes is a big draw for some speculators, so even companies that have no revenue, no profits and a reputation for falling short can manage to find investors. Unfortunately, these high-risk investments often have little chance of ever paying off, and many investors pay a price to learn their lesson. Loss-making companies can act as a sponge for capital. So investors should be careful not to throw good money after bad.

Despite being in the era of blue-sky investing in technology stocks, many investors still employ a more traditional strategy; buying shares in profitable companies such as Walmart (NYSE:WMT). While this doesn’t necessarily tell you if it’s undervalued, the company’s profitability is enough to warrant some appreciation, especially if it’s growing.

Check out our latest analysis for Walmart

How fast is Walmart growing?

If you believe that markets are even remotely efficient, then over the long term you would expect a company’s share price to follow its earnings per share (EPS). That’s why there are plenty of investors who like to buy shares in companies that are growing earnings per share. Walmart managed to grow earnings per share by 6.6% per year in three years. That may not be particularly high growth, but it does show that earnings per share are steadily moving in the right direction.

One way to check a company’s growth is to look at how its revenue and earnings before interest and tax (EBIT) margins are changing. EBIT margins for Walmart have been largely unchanged over the past year, but the company can be pleased with revenue growth for the period of 6.0% to $648 billion. That’s progress.

In the chart below, you can see how the company has grown earnings and revenue over time. For finer details, click on the image.

NYSE:WMT earnings and revenue history March 8, 2024

Luckily, we have access to analyst forecasts from Walmart future gain. You can make your own predictions without looking, or you can take a look at what the pros are predicting.

Are Walmart Insiders Aligned with All Shareholders?

Due to Walmart’s size, we don’t expect insiders to own a significant portion of the company. But we are reassured by the fact that they have invested in the company. Indeed, they have invested a significant amount of wealth in it, currently valued at $4.3 billion. This amounts to 0.9% of the shares in the company, which is a considerable amount for a company of this size. So even though their percentage of shares is low, company management still has plenty of reasons to provide investors with the best results.

Is Walmart worth keeping an eye on?

A key encouraging feature of Walmart is that its profits are growing. For those looking for a little more than this, the high level of insider ownership increases our enthusiasm for this growth. That combination is very attractive. So yes, we think the stock is worth keeping an eye on. What about risks? Every company has them, and we’ve seen them 1 warning sign for Walmart you should know.

There is always the opportunity to do well by buying shares are not growing revenues and Do not lets insiders buy shares. But for those considering these important metrics, we encourage you to check out companies that do Doing that have characteristics. You’ll get access to a tailored list of companies that have shown growth, supported by recent insider purchasing.

Please note that the insider transactions discussed in this article relate to reportable transactions in the relevant jurisdiction.

Valuation is complex, but we help make it simple.

Find out if Walmart may be over or undervalued by reviewing our comprehensive analysis, including: fair value estimates, risks and cautions, dividends, insider transactions and financial health.

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This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. We aim to provide you with targeted, long-term analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Simply Wall St has no positions in the stocks mentioned.

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