WalmartWide moat

WMT — overall economic moat

Investment snapshot
Wide moat↗ WideningConfidenceHighValuationExpensive
Strongest advantageA cost advantage large enough to be given away as price rather than banked
Greatest threatGeneral merchandise, the profitable half, has not grown in three years
Key metricReturn on investment (15.1%, down from 15.5%)
Verdict: The widest moat in retailing around a business with modest economics - four cents of operating profit on the dollar - and the whole investment case is that about one per cent of the revenue now produces something close to a fifth of the profit.
📈 WMT valuation, revenue & earnings — P/E, P/S, revenue, EPS →

Walmart took $713,163 million through its tills in the year to 31 January 2026 and kept $29,825 million of it as operating profit1. That is four and a fifth cents on the dollar. After interest and tax the shareholders were left with $21,893 million — three cents2. Both of those numbers have been roughly true of this company for a generation, and they are the first thing to understand about it. Walmart does not earn a wide margin on a large volume. It earns one of the thinnest margins in this collection on the largest volume there is.

Where the $713.2 billion comes from, FY2026Walmart U.S. — 68%Walmart International — 18%Sam's Club U.S. — 13%Membership and other — 0%Total revenues $713,163M. Walmart U.S. is 68% of revenue and 84% of operating income.
Two thirds of the revenue and five sixths of the profit come from one segment. The other two are a $130bn international business at a thinner margin and a warehouse club that earns 2.6%.

The volume is the whole argument. Each week about 280 million customers walk into more than 10,900 stores in 19 countries or open one of the company's apps, and 2.1 million people work there, 1.6 million of them in the United States3. The income statement is almost embarrassingly plain: $535,395 million to buy the goods, $147,943 million to move them and sell them, and whatever survives is the profit4.

Three segments do the work. Walmart U.S. — 4,611 stores — turned over $485,599 million at a 5.2% operating margin, about two thirds of the company's revenue and five sixths of its profit. Walmart International sold $130,423 million across 5,743 stores in 18 countries at 3.9%. Sam's Club U.S. did $95,540 million from 601 clubs at 2.6%. Corporate costs took back $2,878 million5. How each segment earns and grows is set out in The Revenue Lines.

What has changed is not the four cents. It is where the four cents comes from. Net sales grew $31,875 million in fiscal 2026; global eCommerce — about $99.6 billion at Walmart U.S., $35.8 billion internationally, $15.0 billion at Sam's Club — grew about $29.5 billion of it6. Something close to ninety-two per cent of Walmart's growth last year happened online7, and almost all of it was picked and packed in stores the company already owned and paid for decades ago.

Underneath that, the merchandise is separating into two piles. Groceries were $285,482 million of Walmart U.S. net sales, and health and wellness $69,547 million against $54,898 million two years earlier. General merchandise — the televisions, the apparel, the homewares, the half of a discount store that has always carried the margin — was $115,060 million against $113,985 million two years before8. In a company growing five per cent a year, it has not grown at all.

And a third business has appeared that is not retail. Advertising was roughly $6.4 billion in fiscal 2026, up 46%9; in the June 2026 quarter membership fee revenue rose 17% and marketplace sales 52%10. Together those lines are about one per cent of revenue, and because they cost almost nothing extra to produce they are something closer to a fifth of the profit. That is the sentence that explains Walmart's share price.

The market has certainly noticed. The shares changed hands at 13.4 times earnings in fiscal 2016 and at about 38 times today11; $100 invested five fiscal years ago was worth $272 at the last year end, against $201 in the S&P 500 and $164 in the index of retailers Walmart belongs to12. Almost none of that came gradually. Three fiscal years produced nothing at all, and then the stock nearly tripled.

The verdict is that this is a wide moat of the most durable kind — one built from fixed costs spread across a volume nobody else can assemble — and that it is still widening against other shops. Walmart is taking share across categories and, in its own words, across income tiers, led by upper-income households13. What the moat has not done is become more profitable. Return on invested capital was 14.3% in fiscal 2015 and about 14.0% in fiscal 202614, and Walmart's own preferred measure fell from 15.5% to 15.1% in the year it earned a record15.

So the number to watch is general merchandise. If the profitable half of the store is still flat three years from now, Walmart will be a grocer with a very good advertising business attached, and forty times earnings is the wrong price for that.

The number that tests this moat
Reported
Revenue, and where it comes from
$713.2 billion, of which Walmart U.S. is $485.6bn

Walmart U.S. is 68% of revenue and 84% of operating income; International $130.4bn at a 3.9% margin and Sam's Club $95.5bn at 2.6%. Watch general merchandise, which at $115,060M has not grown in three years while grocery and pharmacy carry the growth.

Source: Walmart Form 10-K, fiscal year ended January 31, 2026 ↗
Moat scorecardHow ratings work →
Switching costs4/10
Network effects6/10
Pricing power8/10
Hard to replicate9/10
Disruption resistance7/10
Overall durability8/10

Switching costs are genuinely low - nothing binds a Walmart shopper except price and proximity - which is why the membership programmes matter more than their size. Replication scores near the top because the estate, the buying power and the distribution network cannot be assembled again at today's prices. Pricing power is high in the unusual sense that Walmart chooses to earn four per cent rather than more. Durability sits at the top of the wide band; what the score does not measure, and the charts do, is that the return on capital has not improved in eleven years.

Dig deeper
DIG DEEPER 01
The Revenue Lines
Three segments, and one of them earned three quarters of ten years' profit; the other two are a decade-long round trip abroad and a club that loses…
DIG DEEPER 02
The Moat
A cost advantage this large is worth more given away than kept, which is why the margin is four per cent and why a court's $2.9 billion went into…
DIG DEEPER 03
Competitors
Four rivals attacking one edge each — channel, model, price, proximity — and not one of them taking the whole trip.
DIG DEEPER 04
Major Clients
Perfect diversification among the customers who walk in, and real concentration among the counterparties who decide what Walmart earns.
✦ Future bets — beyond today's moat
✦ FUTURE BET 01
The Future Bets
Almost none of Walmart's bets are about selling more goods, because a company earning four cents cannot improve much that way.
⚠ Threats to the moat
⚠ THREAT 01
The Profitable Half Stopped Growing
General merchandise has not grown in three years, and it is the half of a discount store that carries the margin.
⚠ THREAT 02
Thirty-Eight Times Earnings for Three Cents on the Dollar
The multiple tripled while the return on capital did not move at all.
◆ What the market may be missing
◆ THE VARIANT VIEW
What the Market Isn't Pricing In
Walmart converted a court's money into permanent share, and no line in the accounts can show it.
◆ THE VARIANT VIEW
Inside the Latest Quarter (Q2 FY2027)
Operating income up 28.8%, net income down 9.4%, and a single non-operating line explains the whole gap.
References
  1. ReportedWalmart took $713,163 million through its tills in the year to 31 January 2026 and kept $29,825 million of it as operating profit.
    Walmart Form 10-K, fiscal year ended January 31, 2026 - consolidated financial statements and notes (total revenues $713,163M, net sales $706,413M, membership and other income $6,750M, cost of sales $535,395M, operating expenses $147,943M, operating income $29,825M, net income attributable to Walmart $21,893M, diluted EPS $2.73; balance sheet including inventories $58,851M, accounts payable $63,061M, property and equipment net $136,083M, accumulated depreciation $134,587M, depreciation and amortisation $14,203M; segment note; disaggregation of revenue by merchandise category and by market, and eCommerce net sales by segment) — FY2026 (ended January 31, 2026) · publ. March 13, 2026 · source ↗
  2. ReportedAfter interest and tax the shareholders were left with $21,893 million — three cents.
    Walmart Form 10-K, fiscal year ended January 31, 2026 - consolidated financial statements and notes (total revenues $713,163M, net sales $706,413M, membership and other income $6,750M, cost of sales $535,395M, operating expenses $147,943M, operating income $29,825M, net income attributable to Walmart $21,893M, diluted EPS $2.73; balance sheet including inventories $58,851M, accounts payable $63,061M, property and equipment net $136,083M, accumulated depreciation $134,587M, depreciation and amortisation $14,203M; segment note; disaggregation of revenue by merchandise category and by market, and eCommerce net sales by segment) — FY2026 (ended January 31, 2026) · publ. March 13, 2026 · source ↗
  3. ReportedEach week about 280 million customers walk into more than 10,900 stores in 19 countries or open one of the company's apps, and 2.1 million people work there, 1.6 million of them in the United States.
    Walmart Form 10-K, fiscal year ended January 31, 2026 - Item 1 Business and Item 2 Properties (approximately 280 million customers a week across more than 10,900 stores in 19 countries; 2.1 million associates, 1.6 million in the U.S.; 4,611 Walmart U.S. retail units of which 3,728 owned, 601 Sam's Clubs of which 464 owned, 5,743 international stores of which 1,486 owned; 3,566 supercenters at 633,724 thousand square feet, 351 discount stores at 36,609, 694 neighborhood markets and small formats at 36,609/28,375 with a 42,000 average; 192 U.S. and 179 international distribution facilities, 149 owned; pickup and delivery at over 8,400 locations globally; EDLP and EDLC; private brands; competition; Flipkart and PhonePe majority stakes in 2018) — FY2026 (ended January 31, 2026) · publ. March 13, 2026 · source ↗
  4. ReportedThe income statement is almost embarrassingly plain: $535,395 million to buy the goods, $147,943 million to move them and sell them, and whatever survives is the profit.
    Walmart Form 10-K, fiscal year ended January 31, 2026 - consolidated financial statements and notes (total revenues $713,163M, net sales $706,413M, membership and other income $6,750M, cost of sales $535,395M, operating expenses $147,943M, operating income $29,825M, net income attributable to Walmart $21,893M, diluted EPS $2.73; balance sheet including inventories $58,851M, accounts payable $63,061M, property and equipment net $136,083M, accumulated depreciation $134,587M, depreciation and amortisation $14,203M; segment note; disaggregation of revenue by merchandise category and by market, and eCommerce net sales by segment) — FY2026 (ended January 31, 2026) · publ. March 13, 2026 · source ↗
  5. ReportedCorporate costs took back $2,878 million.
    Walmart Form 10-K, fiscal year ended January 31, 2026 - consolidated financial statements and notes (total revenues $713,163M, net sales $706,413M, membership and other income $6,750M, cost of sales $535,395M, operating expenses $147,943M, operating income $29,825M, net income attributable to Walmart $21,893M, diluted EPS $2.73; balance sheet including inventories $58,851M, accounts payable $63,061M, property and equipment net $136,083M, accumulated depreciation $134,587M, depreciation and amortisation $14,203M; segment note; disaggregation of revenue by merchandise category and by market, and eCommerce net sales by segment) — FY2026 (ended January 31, 2026) · publ. March 13, 2026 · source ↗
  6. ReportedNet sales grew $31,875 million in fiscal 2026; global eCommerce — about $99.6 billion at Walmart U.S., $35.8 billion internationally, $15.0 billion at Sam's Club — grew about $29.5 billion of it.
    Walmart Form 10-K, fiscal year ended January 31, 2026 - consolidated financial statements and notes (total revenues $713,163M, net sales $706,413M, membership and other income $6,750M, cost of sales $535,395M, operating expenses $147,943M, operating income $29,825M, net income attributable to Walmart $21,893M, diluted EPS $2.73; balance sheet including inventories $58,851M, accounts payable $63,061M, property and equipment net $136,083M, accumulated depreciation $134,587M, depreciation and amortisation $14,203M; segment note; disaggregation of revenue by merchandise category and by market, and eCommerce net sales by segment) — FY2026 (ended January 31, 2026) · publ. March 13, 2026 · source ↗
  7. Moat Explorer calcSomething close to ninety-two per cent of Walmart's growth last year happened online, and almost all of it was picked and packed in stores the company already owned and paid for decades ago.
    Moat Explorer calculation from figures in Walmart's own filings: global eCommerce of about $150.4 billion (Walmart U.S. $99.6B + International $35.8B + Sam's Club $15.0B) against $120.9 billion, a $29.5 billion increase against a $31,875M rise in net sales ($706,413M against $674,538M), about 92%; Walmart U.S. selling floor of 698.7 million square feet (633,724 + 36,609 + 28,375 thousand) and net sales per store of $104.7 million ($482,975M over 4,611 stores); operating margin 4.18% ($29,825M/$713,163M) against 4.31% ($27,012M/$648,125M); net margin 3.07%; gross profit rate 24.2% ($171,018M/$706,413M); grocery 59.1% of Walmart U.S. net sales ($285,482M/$482,975M) against 59.8% ($264,210M/$441,817M) and grocery growth of 3.4%; general merchandise to grocery ratio 0.40 against 0.43; health and wellness +26.7% ($54,898M to $69,547M); payables less inventories $4,210M ($63,061M less $58,851M); rent 0.34% of revenue ($2,434M/$713,163M); capital expenditure 64% of operating cash flow ($26,642M/$41,565M); a 1% overrun on $147,943M of expense is $1,479M; eCommerce penetration 27.5% international ($35.8B/$130,423M) and 20.6% at Walmart U.S. ($99.6B/$482,975M); shareholder returns $15,587M ($7,507M dividends plus $8,080M repurchases) against $14,923M of free cash flow; Q2 FY2027 net income attributable down 9.4% ($6,366M against $7,026M); Walmart U.S. comparable sales of about 3.9% excluding the 125 basis point pharmacy headwind — FY2024-Q2 FY2027 · publ. September 2026 · source ↗
  8. ReportedGeneral merchandise — the televisions, the apparel, the homewares, the half of a discount store that has always carried the margin — was $115,060 million against $113,985 million two years before.
    Walmart Form 10-K, fiscal year ended January 31, 2026 - consolidated financial statements and notes (total revenues $713,163M, net sales $706,413M, membership and other income $6,750M, cost of sales $535,395M, operating expenses $147,943M, operating income $29,825M, net income attributable to Walmart $21,893M, diluted EPS $2.73; balance sheet including inventories $58,851M, accounts payable $63,061M, property and equipment net $136,083M, accumulated depreciation $134,587M, depreciation and amortisation $14,203M; segment note; disaggregation of revenue by merchandise category and by market, and eCommerce net sales by segment) — FY2026 (ended January 31, 2026) · publ. March 13, 2026 · source ↗
  9. ReportedAdvertising was roughly $6.4 billion in fiscal 2026, up 46%; in the June 2026 quarter membership fee revenue rose 17% and marketplace sales 52%.
    Marketing Dive - Walmart global advertising revenue of nearly $6.4 billion in fiscal 2026, up 46%, with Walmart Connect U.S. up 41% in the fourth quarter; advertising and membership fees accounted for about a third of fourth-quarter operating income — FY2026 · publ. 2026 · source ↗
  10. ReportedAdvertising was roughly $6.4 billion in fiscal 2026, up 46%; in the June 2026 quarter membership fee revenue rose 17% and marketplace sales 52%.
    Walmart second-quarter fiscal 2027 earnings release (Form 8-K exhibit 99.1) - revenue $187.9 billion +5.9% and +5.1% in constant currency; operating income +28.8% and +17.4% adjusted in constant currency; global eCommerce +23%; global advertising +38% with Walmart Connect excluding VIZIO +43%; membership fee revenue +17%; gross profit rate +96 basis points and Walmart U.S. +158; Walmart U.S. comp sales +2.6% and operating income +20.6% with operating expenses deleveraged 72 basis points; Sam's Club operating income +44.3% and International +16.6%; ROA 8.0% and ROI 15.4%; free cash flow $5.5 billion; 42.3 million shares repurchased for $5.1 billion year to date; FY27 guidance of 4.0-5.0% net sales growth, 7.0-8.5% adjusted operating income growth and $2.80-$2.87 adjusted EPS — Q2 FY2027 · publ. August 20, 2026 · source ↗
  11. ReportedThe shares changed hands at 13.4 times earnings in fiscal 2016 and at about 38 times today; $100 invested five fiscal years ago was worth $272 at the last year end, against $201 in the S&P 500 and $164 in the index of retailers Walmart belongs to.
    Market data (stockanalysis.com) - $105.73 a share, ~$838.8B market cap, ~38x trailing and ~35x forward earnings, ~1.14x sales, 0.94% dividend yield, 52-week range $98.88-$135.16; fiscal-year-end market capitalisations back to fiscal 2016 — September 10, 2026 · publ. 2026 · source ↗
  12. ReportedThe shares changed hands at 13.4 times earnings in fiscal 2016 and at about 38 times today; $100 invested five fiscal years ago was worth $272 at the last year end, against $201 in the S&P 500 and $164 in the index of retailers Walmart belongs to.
    Walmart Form 10-K, fiscal year ended January 31, 2026 - Item 1A Risk Factors and Item 5 (the eCommerce concentration and AI-enabled platform risk factor; five-year cumulative total return with $100 invested on February 1, 2021 worth $272.28 in Walmart against $201.03 in the S&P 500 and $164.12 in the S&P 500 Consumer Discretionary Distribution and Retailing Index; the $20.0 billion November 2022 repurchase programme with $4.0 billion remaining and the new $30.0 billion authorisation approved February 2026) — FY2026 (ended January 31, 2026) · publ. March 13, 2026 · source ↗
  13. ReportedWalmart is taking share across categories and, in its own words, across income tiers, led by upper-income households.
    Walmart second-quarter fiscal 2027 earnings presentation (Form 8-K exhibit 99.2) - Walmart U.S. comp sales +2.6% with transactions excluding fuel +1.5% and average ticket excluding fuel +1.1% against total like-for-like inflation of 1.4%, and an approximately 125 basis point pharmacy headwind from maximum fair price regulation; eCommerce +24% including approximately 43% growth in store-fulfilled delivery, total advertising +38% including Walmart Connect +43%, and Marketplace sales +52%; expedited deliveries under three hours approximately 37% of store-fulfilled orders; share gains across categories and income tiers led by upper-income households — Q2 FY2027 · publ. August 20, 2026 · source ↗
  14. Moat Explorer calcReturn on invested capital was 14.3% in fiscal 2015 and about 14.0% in fiscal 2026, and Walmart's own preferred measure fell from 15.5% to 15.1% in the year it earned a record.
    Moat Explorer calculation from SEC EDGAR XBRL: NOPAT (operating income less tax at the effective rate) over average operating invested capital (assets less current liabilities less cash) - 14.3% for fiscal 2015, 10.3% for fiscal 2021, 9.5% for fiscal 2023, 14.7% for fiscal 2025 and about 14.0% for fiscal 2026 (operating income $29,825M, effective tax rate 24.4%, invested capital $166,472M against $155,202M), against an assumed 7% cost of capital — FY2015-FY2026 · publ. September 2026 · source ↗
  15. ReportedReturn on invested capital was 14.3% in fiscal 2015 and about 14.0% in fiscal 2026, and Walmart's own preferred measure fell from 15.5% to 15.1% in the year it earned a record.
    Walmart Form 10-K, fiscal year ended January 31, 2026 - Item 7 MD&A (Walmart U.S. comparable sales +4.3% with eCommerce contributing approximately 4.3 percentage points; return on assets 8.2% and return on investment 15.1% against 15.5%; net cash provided by operating activities $41,565M, payments for property and equipment $26,642M, free cash flow $14,923M against $12,660M and $15,120M; rent $2,434M; cash $10.7 billion and a $22.6 billion working capital deficit; membership income commentary) — FY2026 (ended January 31, 2026) · publ. March 13, 2026 · source ↗
Sources
Generated September 22, 2026