Investors don't need to buy the latest and greatest technology enterprises to achieve spectacular results. Walmart (WMT +1.03%) is a case in point. Its share price is up 183% in the past five years and 448% over the trailing decade (as of Feb. 26). This might come as a surprise, as the business flirts with a trillion-dollar market cap.
If you're impressed by Walmart's stellar performance, maybe it's time to take a closer look. Here are three things investors need to know about this retail stock before buying.
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A steady performer with a wide moat
The current macro environment, particularly in the U.S., can be characterized as a K-shaped economy. This describes the divergence between higher-income and lower-income consumers, with the former faring better than the latter. This backdrop doesn't faze Walmart, whose entire value proposition is predicated on providing as much value as it can to shoppers. This cuts across income cohorts. And it's something that will always be in demand.
This points to the reality that Walmart is one of the most stable businesses that investors can find in the market. It reported same-store sales (SSS) growth in the U.S. of 4.6% in Q4 2026 (ended Jan. 31). This was at least the 28th straight quarter that it posted positive SSS. This is a resilient company that navigated the COVID-19 pandemic, supply chain bottlenecks, surging inflation, rising interest rates, and tariff uncertainty.
There is also almost zero risk that Walmart gets disrupted or becomes obsolete anytime soon. That's because it has a wide and durable economic moat.
The company's gargantuan scale helps fuel its success. It generated $706 billion in net sales in fiscal 2026. Consequently, Walmart has unmatched bargaining power when buying merchandise from suppliers. And compared to smaller competitors, it's better able to spread out certain fixed expenses.
Walmart's brand name is also a key strategic asset. Customers have come to expect low prices, a massive assortment, and omnichannel capabilities. Visibility is also broad, thanks to 5,200 total stores (including Sam's Club) just in the U.S.
Upgrading the business
Despite what investors might initially assume, Walmart is not a dinosaur of a retail enterprise. The business has truly become a tech-forward machine.
It has adapted with the rise of online shopping. E-commerce revenue jumped 24% year over year in Q4, more than four times faster than the overall company. Walmart's advantage is its physical footprint, as its stores assist in fulfillment capabilities. "We can serve 95% of America in three hours," CFO John David Rainey said on the Q4 2026 earnings call.
Memberships also shouldn't be overlooked. Paid subscription service Walmart+ was launched in September 2020. It now has over 28 million members, bringing in a sticky income stream.
Walmart is making a splash in advertising, which saw revenue soar 37% during Q4. And it's innovating with artificial intelligence, most notably with its Sparky shopping assistant.
Altogether, Walmart's push to become a more digitally enabled business supports its bottom line. It introduces higher-margin revenue.
NASDAQ: WMT
Key Data Points
Don't ignore valuation
There's no denying that Walmart is a high-quality business. Its net income is up 97% just in the past three years. That supports management's ability to return capital to shareholders.
Investors seeking a Dividend King don't need to look any further. The company just announced another payout hike. It's been 53 straight years that the dividend has increased.
For those that want a winning opportunity, however, now is a terrible time to put capital at risk. The valuation is excessive, providing no margin of safety. The market is asking that prospective investors pay a price-to-earnings ratio of 45.6 to buy this retail stock. That's almost double the S&P 500 index's multiple. Walmart is poised to disappoint its shareholders in the years ahead.
