Cintas (CTAS +1.91%) is a leading provider of business supplies and equipment to more than 1 million businesses in North America. However, a large customer base is not enough to guarantee strong returns in the stock market.
The stock has been flat over the past year, and that has caused some investors to look for better options. Walmart (WMT +0.31%) looks like the better pick at current levels as the retail stock approaches a $1 trillion valuation.
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Walmart is the global retail leader
Walmart has more than 10,000 locations worldwide, which gives it a distribution network that few retailers can match. This advantage lets Walmart offer much lower prices than the competition while storing more products.
NASDAQ: WMT
Key Data Points
Convenience and great pricing have turned Walmart into the go-to destination for budget-conscious shoppers, and as the cost of living continues to increase, more people may gravitate toward Walmart.
Even large retailers like Target are feeling the pinch as revenue and net income continue to drop. Walmart has established itself as the everything store, and it will be a hard title for any other retailer to claim. Amazon is the best e-commerce competitor, but in terms of physical locations, Walmart has a distinct moat.
Margins are expanding
Although Walmart has slower revenue growth than Cintas, the retailer makes up for it with rising profit margins. Online ads, e-commerce, and third-party sellers have contributed to Walmart's rising profits. Walmart has plenty of room to expand its margins -- which currently hover at around 3% -- if these initiatives continue to grow.
Walmart's net income increased by 34.2% year over year in the third quarter of fiscal year 2026, ended Oct. 31. That's why investors are excited about the stock and believe it warrants more attention than Cintas stock. The two main profit margin drivers -- online ads and e-commerce -- posted 53% and 27% year-over-year growth rates, respectively.
Those two segments can drive meaningful revenue growth to Walmart's retail operations. Sales inched up by 5.8% year over year for Walmart, and as high-growth parts of the business make up a higher percentage of total revenue, Walmart's financials should continue to march higher.
Walmart provides essentials for more people
Walmart and Cintas both offer essential resources. Some businesses need Cintas' equipment and supplies to properly function or operate in a safe manner, but Walmart is essential for more people.
The global retailer's largest segment is groceries, making up more than half of its total revenue. If people visit Walmart for groceries, they may put additional products in their shopping carts. The convenience of many products in one place makes it easier for people to buy discretionary items after covering the essentials.
Its distinction as one of the top grocery choices worldwide makes Walmart much more difficult to replace in various communities than the typical business, and it sets the stage for additional stock gains.
