Walmart Inc. operates as a global omni‑channel retail and membership‑club provider, combining extensive brick‑and‑mortar with eCommerce and ancillary services, supported by very strong operating cash generation, conservative leverage, modest margins, and a premium valuation. Financial Profile Overview The company’s cash generation and earnings quality are notable: trailing twelve‑month operating c
Walmart Inc. operates as a global omni‑channel retail and membership‑club provider, combining extensive brick‑and‑mortar with eCommerce and ancillary services, supported by very strong operating cash generation, conservative leverage, modest margins, and a premium valuation.
The company’s cash generation and earnings quality are notable: trailing twelve‑month operating cash flow was $41.56B versus TTM net income of $21.89B. Operating cash flow has exceeded net income in every reported period most recently, supporting a cash conversion ratio of 2.04x and an operating‑cash‑to‑net‑income ratio of approximately 1.9x (Strategic Capital Allocation, Earnings Quality Analysis). Profitability remains strong with trailing twelve‑month ROE around 22.0% (Return on Equity (ROE)).
Liquidity presents a concern, with a current ratio of 0.79, indicating shorter‑term working capital tightness, despite conservative long‑term leverage—debt/equity ratio at 0.383 and interest coverage around 12.7x (Revenue & Net Income). Profit margins are relatively narrow and have recently been under downward pressure: gross margin at 24.9%, operating margin at 4.1%, and net margin at 3.1%. Quarterly net income has been volatile, with recent quarter at $4.24B versus $7.03B three quarters prior (Profit Margin Trends, Revenue & Net Income). The company's market valuation remains elevated, with a trailing P/E ratio around 45.5x (Price-to-Earnings (PE) Ratio Trend).
Going forward, important fundamentals include operating cash flow versus net income (TTM OCF $41.56B vs. TTM net income $21.89B), cash conversion ratio, changes in operating and net margins (most recent 4.1% and 3.1%), ROE trends around the low‑to‑mid 20% range, revenue‑per‑share growth, volatility in diluted EPS, short‑term liquidity indicated by current ratio (~0.79), and movements in the trailing P/E ratio from the current ~45.5x level.
The foundation of business quality and long-term value creation
Walmart Inc.'s quarterly revenue shows a multi-year upward trend with notable quarter-to-quarter increases in the most recent year. Revenue rose from $165.61B in the 2025-04-30 quarter to $177.40B (2025-07-31), $179.50B (2025-10-31) and reached the highest reported level of $190.66B in the 2026-01-31 quarter, reflecting consistent top-line growth across the last year.
Net income is more variable across the series. After a peak of $7.03B in 2025-07-31, net income declined to $6.14B (2025-10-31) and $4.24B most recently (2026-01-31). The historical record also shows episodic swings, including negative quarters (e.g., -$2.09B on 2021-01-31 and -$1.80B on 2022-10-31) and high single-quarter profits (e.g., $7.89B on 2023-07-31). The most recent quarterly revenue was $190.66B and the most recent quarterly net income was $4.24B.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Period Information
Report Type: Annual (10-K)
Period: Feb 2025 to Jan 2026
Revenue composition by disclosure category for the latest period
Key Risk: Dependence on large volumes of merchandise purchased from suppliers for inventory availability; reliance on physical store locations for omni‑channel fulfillment and pickup services; membership income is sensitive to member renewal rates in the Sam’s Club U.S. segment.
Analyzing long-term margin stability and competitive positioning
Walmart Inc.'s gross margin has been stable in recent quarters, holding at 24.9% across the four most recent reported gross-margin quarters (2025-01-31 through 2025-10-31) after a gradual rise from the low-24% range in 2022–2024. That stability indicates little movement in the percentage of revenue retained after cost of goods sold over the most recent year.
Operating and net margins show more movement. Operating margin reached about 4.3% in early 2025 and then eased to 4.1% by the 2025-10-31 quarter, indicating a modest decline in operating profitability in the most recent quarters. Net profit margin improved from multi-year lows (notably 1.4% in 2021-10-31) to a peak of 3.3% in 2025-10-31 and then declined slightly to 3.1% in the most recent 2026-01-31 data point. The most recent gross margin was 24.9%, the most recent operating margin was 4.1%, and the most recent net profit margin was 3.1%.
Understanding Profit Margins
Between Feb 2025 and Jan 2026, Walmart Inc converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
Over the past several quarters Walmart Inc.'s operating cash flow (TTM) has trended upward, rising from $36.44B on 2025-01-31 to $41.56B on 2026-01-31, with steady increases each quarter since early 2025. Trailing twelve-month net income also increased through mid-2025—$18.82B on 2025-04-30 to a high of $22.91B on 2025-10-31—then edged down to $21.89B on 2026-01-31. In the most recent quarters the operating cash flow has grown more consistently than net income, widening the cash-versus-earnings gap.
Across the full history shown, operating cash flow has exceeded net income in every reported period, with the gap expanding and contracting at various inflection points (notably around 2020–2021 and again through 2024–2026). The most recent trailing twelve-month operating cash flow was $41.56B, and the most recent trailing twelve-month net income was $21.89B.
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
Walmart Inc.'s trailing twelve-month Return on Equity has been elevated in recent quarters, with ROE at 23.8% on 2025-10-31 and 23.7% on 2025-07-31 before moderating to 22.5% on 2025-04-30 and most recently 22.0% on 2026-01-31. A notable near-term inflection occurred in 2024-07-31 when ROE fell to 18.4%, after which the metric recovered back above 20% through late 2024 and 2025.
Over the multi-year series, ROE shows significant variability: the series ranges from a low of 7.2% (2018-10-31) to highs above 25% (25.3% on 2011-04-30 and 24.3% on 2013-04-30), with other pronounced swings such as 24.2% on 2020-10-31 and a dip to 9.7% on 2021-10-31. The most recent trailing twelve-month Return on Equity for Walmart Inc. was 22.0% as of the period ending 2026-01-31.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
Over the most recent year Walmart Inc.'s operating cash flow (TTM) has strengthened steadily, rising from about $36.4B in early 2025 to $41.6B in the latest quarter, and remains the largest cash source.
Investing cash flow has been a consistent outflow; it was near -$21B to -$22B in early 2025, moved to a larger outflow of -$27.75B at the 2025-10-31 quarter and eased slightly to -$26.35B most recently.
Financing cash flow has been persistently negative, generally in the -$12B to -$15B range over the past year, with a notable larger outflow of -$22.91B at 2024-10-31 before settling into the mid-teens negatives.
Taken together as of the latest trailing twelve months, operating cash generation exceeds the combined investing and financing outflows, producing a small positive net TTM cash flow.
The most recent TTM operating cash flow was $41.56B, the most recent TTM investing cash flow was -$26.35B, and the most recent TTM financing cash flow was -$13.55B.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
Walmart Inc.'s trailing twelve-month P/E has generally trended higher over the past two years. After a trough of 25.1x on , it rose into the mid-30s through mid-2024, moved up into the low-40s by early 2025 (40.5x on
Over the longer run the P/E series has ranged from single-digit readings in 2010–2011 to peaks above 50x in 2018 (52.0x on ) and 2021 (49.9x on
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.