Retail giant Walmart (WMT) delivered better-than-expected Q4 financials for its fiscal 2025. While the retailer’s top and bottom lines surpassed the Street’s forecast, its guidance was disappointing, leading to a drop in its share price. While Walmart’s conservative outlook dragged its stock lower, there are three strong reasons to buy it now.
Reason #1: Walmart’s Market Share Set to Keep Growing
Walmart is the dominant player in the retail space, and its market share is only getting stronger. Despite economic uncertainties and shifting consumer behaviors, Walmart continues to thrive, thanks to its growing e-commerce presence, value-driven pricing strategy, and expansion into private-label products. These factors set Walmart apart from competitors and position it for continued gains.
One of Walmart’s biggest strengths is its e-commerce business, which has been steadily growing. Its online sales now make up 18% of Walmart’s total revenue, a significant jump from just a few years ago. In the U.S. alone, the company has built a robust marketplace that expands its product offerings, enabling it to meet the growing demand for online shopping. Even more impressive is the efficiency with which Walmart fulfills these orders. It has processed over 500 million e-commerce orders from stores without opening new locations.
This continued digital expansion is paying off. In the most recent quarter, Walmart’s global e-commerce sales jumped 16%, reflecting the strong demand for its delivery and pickup services. Customers appreciate the speed and accuracy of Walmart’s online shopping experience, making it a convenient destination.
While brand-name merchandise is a staple at Walmart, the retailer is increasingly relying on its private-label products as a key driver of growth. These exclusive brands allow Walmart to offer high-quality, lower-priced alternatives to national brands, attracting price-conscious consumers while boosting profitability. With a strong mix of U.S. private brands and region-specific labels, Walmart is able to compete effectively on both price and product variety.
Reason #2: Walmart’s Profits Are Growing Faster Than Sales
Walmart is growing its profits faster than sales. In the most recent four quarters, Walmart’s revenue grew at a steady pace — rising 6% in Q1, 4.8% in Q2, 5.5% in Q3, and 4.1% in Q4. In comparison, its adjusted operating income grew by 13.7%, 7.2%, 8.2%, and 7% in those same periods.
The momentum in its operating income will likely sustain as Walmart has been scaling up its higher-margin businesses, including its membership programs, third-party marketplace, and digital advertising. These segments are growing rapidly, diversifying Walmart’s revenue streams and supporting its margins. The company’s e-commerce operations, particularly in the U.S., have become increasingly efficient, contributing to stronger profitability.
Another key contributor is its booming advertising business, which grew 27% over the past year, reaching approximately $4.4 billion. Its U.S. Marketplace is also thriving, with revenue jumping 37%, and nearly 45% of orders now fulfilled through Walmart Fulfillment Services (WFS). Additionally, global membership income rose 21% to around $3.8 billion. The growth in its membership income will likely be one of the largest drivers of its profitability and help grow its operating income faster than sales.
Reason #3: Walmart Is a Reliable Dividend Stock
The retail giant’s stellar track record of dividend growth makes WMT a reliable income stock.
Walmart recently announced a 13% increase in its annual dividend, raising it to $3.76 per share — the largest hike in more than a decade. This marks 52 consecutive years of dividend growth, reflecting the company’s commitment to rewarding shareholders.
This significant dividend boost reflects management’s confidence in the company’s growth outlook and its ability to generate robust earnings and cash flow.
Conclusion
In conclusion, Walmart’s strong market position, expanding e-commerce presence, growing scale of its higher-margin businesses, and commitment to shareholder returns will support Walmart stock in the long term.
Wall Street analysts are optimistic, maintaining a “Strong Buy” rating on Walmart stock. While short-term market fluctuations may impact its share price, the company’s long-term growth story remains intact.
