The market is overly worried about Walmart’s price war, and omni-channel profitability supports the rise in stock prices (Bernstein)
The report believes that the market's concerns about the impact of Walmart's price investment on profits are excessive, and the company can use tariff rebates to hedge costs and continue to gain market share.
The report believes that the market's concerns about the impact of Walmart's price investment on profits are excessive, and the company can use tariff rebates to hedge costs and continue to gain market share. The unsubsidized EBIT profit margin of core U.S. e-commerce companies is expected to turn positive in FY 2030. There is room for EPS upside of $1.25 in the next four years, and the current valuation is attractive. One-sentence conclusion: Wal-Mart's profit model is transforming from a traditional retailer to an omni-channel ecosystem. The market's concerns about its profit margin decline have been seriously exaggerated, and its stock price has been underestimated due to pessimism. Positive/negative: Positive for Walmart (WMT.US). The market's panic over price wars and tariffs has created a good buying point (the negative news has mostly priced in), and the profit contribution of its e-commerce and advertising businesses has not yet been fully appreciated by the market. Catalysts: 1) Walmart quarterly earnings report, verifying stable profit margins and e-commerce growth; 2) revenue growth from retail media network (Walmart Connect); 3) US consumer confidence and retail sales data.