Investors often pay close attention to insider buying activity, as it can signal leadership's confidence in the company’s future performance. These individuals typically have an in-depth understanding of the company’s operations and prospects, giving their actions considerable weight. When insiders invest their own money into the stock, it is often seen as a strong vote of confidence and a bullish signal that they believe the share price is poised to increase.
Considering this, when a board member at one of the world's largest retailers invests half a million dollars to carry out the first insider purchase of the company's stock in over a year, it certainly does warrant a closer look.
About Walmart Stock
Founded by the legendary Sam Walton in 1962, Walmart (WMT) operates a chain of hypermarkets, discount department stores, and grocery stores. It serves customers globally with over 10,500 stores across 20+ countries, operating under various banners such as Walmart, Sam’s Club, and Asda. Additionally, Walmart has a strong online presence, contributing significantly to its revenue through e-commerce sales. The retail giant currently commands a market cap of about $766.04 billion.
WMT stock has rallied to new highs this year, up 82.4% on a year-to-date basis. Moreover, the outperforming stock is a “Dividend King,” though its share price outperformance means that WMT now offers a relatively modest dividend yield of just 0.87%.
Insider Buying on Walmart Stock
While WMT stock isn't exactly cheap at new highs, at least one strategically placed investor thinks the shares are a good buy right now.
On Nov. 27, Walmart board member Bob Moritz Jr. purchased 5,446 shares of the company at an average price of $91.81 per share, for a total value of nearly $500,000. This marked the first insider purchase of WMT shares since March 2023, which means it's also the first since the retail giant's February 2024 stock split.
Notably, Moritz is the former global chair of accounting and auditing powerhouse PricewaterhouseCoopers (PwC), and sits on the audit committee of Walmart's board.
Walmart's Strong Financials
Over the years, although Walmart may not have displayed the eye-watering growth rates of some tech companies, it has been a steady performer. Over the past five years, WMT delivered revenue and earnings CAGRs of 5.28% and 6.75%, respectively. Moreover, analysts are expecting Walmart to report forward revenue and earnings growth rates of 5.19% and 24.17%, both higher than the sector medians of 2.59% and 8.81%, respectively.
Walmart posted blockbuster numbers for the third quarter of fiscal 2025, with both revenue and earnings surpassing estimates. Total revenues of $169.6 billion were up 5.5% from the previous year, as a new revenue stream in the form of advertising grew 28% yearly, while a comparable sales increase of 5.3%, a rise in average ticket sizes, and traffic growth also contributed.
Earnings grew 13.7% to $0.58 per share, surpassing the consensus estimate of $0.53 per share. This marked the 10th consecutive quarterly earnings beat from WMT.
Net cash flow from operating activities for the first nine months of 2024 increased by 20.5% on a YoY basis to $22.9 billion, as the company closed the quarter with a healthy cash balance of $10 billion, dwarfing its short-term debt levels of $3.6 billion.
Walmart also raised its guidance for 2025. The company now expects net sales to increase by 4.8% to 5.1% (vs 3.75% to 4.75% earlier) and earnings to be between $2.42 to $2.47 per share (vs $2.35 to $2.43 per share earlier).
What's Next for Walmart Stock?
Walmart is laying the foundation for its next phase of growth by focusing on digital transformation, e-commerce, advertising, and the expansion of its third-party marketplace. These strategic initiatives have propelled Walmart to become the second-largest e-commerce platform in the U.S. by market share. In the grocery segment, Walmart dominates with nearly 27% market share, well ahead of Amazon’s (AMZN) 18.5%.
Moreover, Walmart's fast-growing e-commerce business presents an opportunity for gross margin expansion. A critical driver of this growth is the company's third-party seller services, which capitalize on Walmart's extensive infrastructure and distribution network. Since these services incur minimal incremental costs, they are poised to contribute meaningfully to Walmart's profitability over time.
The company has also demonstrated adaptability in the competitive Chinese market by integrating physical and digital strategies to align with local consumer preferences. Its smaller-format stores, which focus on fresh food, cater to urban space constraints and the shopping habits of Chinese customers. Additionally, Walmart’s membership-only Sam’s Club has performed exceptionally well, driven by rising middle-class demand for premium imported goods.
Finally, Walmart has been actively leveraging artificial intelligence (AI) and automation to enhance operational efficiency and reduce costs. Recently, the company projected that by year-end, approximately 3,000 of its 4,600 stores will incorporate some level of automation. This advancement is expected to streamline the distribution network and significantly lower operating expenses.
Analysts Stick With a ‘Strong Buy’ Rating
WMT stock has a “Strong Buy” rating overall from analysts, with a mean target price of $96.80 - nearly flat with current prices. Out of 36 analysts covering the stock, 29 have a “Strong Buy” rating, 4 have a “Moderate Buy” rating, and 3 have a “Hold” rating.
