Should you buy Walmart stock?

walmart (NYSE:WMT), the largest U.S. retailer (at least for now), had the biggest gain on Thursday, with its stock soaring about 6% to a record high of $64 per share. Catalysts for the giant included a first-quarter earnings report that toppled analysts’ estimates and forecasts promising more profits ahead.

Let’s take a look at whether Walmart is a stock you should add to your portfolio.

Recession-proof?

Walmart has been one of the most consistent performers for many years. In fact, you could call it recession proof. The average annual rate of return over the past 10 years is 9.5%, and when reinvested dividends are added, the average annual rate of return goes up to 11.1%. As proof of its steady nature, Walmart has increased its annual dividend for 52 consecutive years and is considered a dividend king.

Additional testimony suggests that Wal-Mart stock prices rarely go too high or too low. Since 2008, there have been only three negative years, with two of those years, 2009 and 2018, seeing annual losses of just 3%. When the market plummeted in 2022, Walmart stock was statistically flat.

Discount retail leader Walmart has performed exceptionally during periods of high inflation or low economic growth as consumers seek better deals. The first quarter of fiscal 2025 proved this once again, with the economy slowing and inflation remaining high. But this time, those strengths took a slightly different turn, with Walmart seeing a surge in business from higher-income, value-seeking consumers along with middle- and lower-income consumers.

“We have seen significant traffic and sales growth across both our stores and digital channels, and we are pleased with our unit growth. We are seeing higher participation across income groups, with higher-income households continuing to account for the bulk of the equity gains,” CFO John David Rainey said on the earnings call.

Rainey added that growth among consumers earning more than $100,000 annually is driven as much by convenience as value.

“Convenience is important to someone at any income level, and we expect that to continue. We don’t expect that to change,” Rainey said.

Walmart executives also reported that the new Bettergoods brand has helped attract customers across the income spectrum because it offers high-quality food at affordable prices and most products cost less than $5.

Soaring profits

The increase in high-income consumers was one of the factors contributing to Walmart’s strong first quarter performance. Sales rose 6% year over year to $161.5 billion, and the retailer’s gross profit margin increased 42 basis points to 24.1%.

Operating profit increased 9.6% to $6.8 billion, and earnings per share (EPS) surged 200% to 63 cents. Adjusted EPS rose 22% to 60 cents.

Another big revenue driver for Walmart has been e-commerce. This is a 21% year-over-year increase globally and a 22% increase in the United States. This is driven by a surge in in-store order pickup and delivery. Advertising revenue also increased, up 24% year over year.

“When I think of this quarter’s headlines, the first thing that comes to mind is e-commerce growth. I think the progress we’re making for customer convenience is great. The market is growing through fulfillment centers as well as in-store fulfillment, which is coupled with increased advertising and membership. It was great to see both up 24%,” said Doug McMillon, president and CEO, on the earnings call.

Is Walmart stock a buy?

Walmart also provided second-quarter guidance calling for a 3.5% to 4.5% increase in net sales and a 3.5% to 4.5% increase in operating profit. The retailer estimated adjusted EPS of 62 cents to 65 cents, up from the first quarter.

For the full fiscal year, Walmart raised its guidance for net sales, adjusted operating profit and adjusted EPS to the highest level or slightly higher than previous estimates. The increase is based on better-than-expected first quarter performance and expectations that this momentum will continue.

Walmart’s P/E ratio has risen slightly to 31, but its forward P/E is 25 and its price-to-sales ratio is low at 0.75.

In my opinion, Walmart stock is almost always a buy given its years of stability and growth, and it looks even better now with the uncertain economic climate ahead and the growth of e-commerce. This isn’t a stock that will catch fire, but it will provide good balance to your portfolio.

disclaimer: All investments involve risk. Under no circumstances should this article be taken as investment advice or constitute liability for investment profits or losses. The information in this report should not be relied upon for investment decisions. All investors should conduct their own due diligence and consult their own investment advisors when making trading decisions.