Walmart trades at $112.52 per share and has stayed right on track with the overall market, gaining 12.5% over the last six months. At the same time, the S&P 500 has returned 14.1%.

Is there a buying opportunity in Walmart, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it’s free for active Edge members.

Why Is Walmart Not Exciting?

We're sitting this one out for now. Here are three reasons why WMT doesn't excite us and a stock we'd rather own.

1. Long-Term Revenue Growth Disappoints

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Regrettably, Walmart’s sales grew at a tepid 5.4% compounded annual growth rate over the last three years. This was below our standard for the consumer retail sector.

2. Low Gross Margin Reveals Weak Structural Profitability

Gross profit margins are an important measure of a retailer’s pricing power, product differentiation, and negotiating leverage.

Walmart has bad unit economics for a retailer, signaling it operates in a competitive market and lacks pricing power because its inventory is sold in many places. As you can see below, it averaged a 24.8% gross margin over the last two years. That means Walmart paid its suppliers a lot of money ($75.19 for every $100 in revenue) to run its business.

3. Weak Operating Margin Could Cause Trouble

Operating margin is an important measure of profitability for retailers as it accounts for all expenses necessary to run a store, including wages, inventory, rent, advertising, and other administrative costs.

Walmart’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 4.2% over the last two years. This profitability was lousy for a consumer retail business and caused by its suboptimal cost structureand low gross margin.

Final Judgment

Walmart’s business quality ultimately falls short of our standards. That said, the stock currently trades at 39× forward P/E (or $112.52 per share). This valuation tells us a lot of optimism is priced in - we think there are better opportunities elsewhere. Let us point you toward the most entrenched endpoint security platform on the market.

Stocks We Like More Than Walmart

The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.

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