Big-box retailer Walmart (WMT 3.51%) is worth close to a $500 billion valuation right now. It's one of the most valuable companies in the world, and it's still eyeing a lot more growth in the future. While it may seem like the already-large retailer may be running out of room to grow, that couldn't be further from the truth. The big question, however, is whether it can make for a top-growth stock and potentially double in value by 2030.
NASDAQ: WMT
Key Data Points
Walmart has multiple growth opportunities it can pursue
Walmart's business is already massive. For the fiscal year ending Jan. 31, 2024, the company generated an incredible $648.1 billion in revenue. In a span of three years, its top line has risen by 16%, while the bottom line has improved by 15% to $15.5 billion.
While that may seem underwhelming for this to be a true growth stock, some catalysts could accelerate Walmart's future growth rate:
- The ad business. Walmart recently announced plans to acquire Vizio for $2.3 billion. The retailer sees an opportunity for Vizio's smart TVs to scale a profitable advertising business, giving it a way to more aggressively compete against rival Amazon. Vizio's SmartCast, which gives users access to apps and free channels, has 18 million active accounts. In 2023, Vizio generated $1.7 billion in revenue along with a relatively modest $28.2 million profit. With the money and power of Walmart behind it, there could be a lot more growth for the retailer to pursue on this front.
- E-commerce and Walmart+ subscription service remain a big opportunity for Walmart. Last fiscal year, Walmart hit a milestone of $100 billion in e-commerce revenue. It now accounts for 13% of total revenue. With Walmart offering Walmart+ subscriptions, which include free delivery, e-commerce could be more of a focus for the company moving forward as it has been a fairly fast-growing area of its business. During the last quarter of fiscal 2024, Walmart's consolidated net revenue rose by 5.7% year over year, but online U.S. sales increased by 17%, with that growth rate rising to 23% when taking into account global markets.
Walmart's stock price could look cheap in a few years
Walmart's stock trades around its all-time highs. And that could make investors think twice about buying the stock. But when you consider its growth opportunities alongside its earnings and revenue multiples, Walmart's valuation doesn't appear to be all that expensive.
The retail stock is trading at a multiple of 31 times its trailing earnings and just 0.8 times its trailing revenue. Amazon, which today appears to be Walmart's biggest competitor, trades at 64 times its profits and more than 3 times its revenue. Amazon's growth has been more impressive over the years, and it has a strong cloud business which makes it a more attractive buy for growth-oriented investors than Walmart.
But if Walmart can become a bigger player in e-commerce and increase its growth rate, it may not be unreasonable to expect that the stock could command higher revenue and earnings multiples in the future. Combine that with more earnings growth due to the opportunities ahead for Walmart, and this certainly has the potential to become a $1 trillion stock in the future.
Will Walmart hit $1 trillion by 2030?
Walmart is a dominant force in retail, and with the potential to become a big player in the ad business and even larger in e-commerce, I think it's probable that its valuation could top $1 trillion by 2030. The company's pricing power gives it a huge advantage over many other retailers. As e-commerce becomes a bigger part of its overall revenue, the company's growth rate should improve and attract more growth investors in the process.
Even though Walmart is trading near its highs right now, long-term investors shouldn't be too concerned, as this is a business that's in fantastic shape and that can be much more valuable in the future.
