⚠ Thirty-Eight Times Earnings for Three Cents on the DollarHigh threat

Walmart (WMT) — threat to the moat

The multiple tripled while the return on capital did not move at all.

Walmart earns three cents of net profit on every dollar of revenue1 and trades at roughly 38 times those earnings2. That combination is the risk, and it is not the one most commentary points at.

Walmart price-to-earnings ratio, fiscal year ends13.4x1615.6x1729.7x1840.6x1922.7x2030.2x2129.4x2232.7x2327.4x2437.3x2540.6x26Market capitalisation over net income attributable to Walmart; ~38x today.
The multiple tripled over a decade. Return on invested capital went from 14.3% to about 14.0% over the same period, and Walmart's own measure of return fell last year.

The multiple has tripled. Walmart changed hands at about 13.4 times earnings at the fiscal 2016 year end and at about 40.6 times at the fiscal 2026 year end3. Over the five fiscal years to January 2026, $100 invested became $272 against $201 in the S&P 500 and $164 in the index of retailers Walmart belongs to4 — and almost none of it happened gradually. The first three of those years produced nothing.

What the market has bought is a mix argument: that advertising, membership and marketplace turn a 4% retailer into something structurally more profitable. That argument is correct in direction and unproven in magnitude. Return on invested capital was 14.3% in fiscal 2015 and about 14.0% in fiscal 20265; Walmart's own preferred measure fell from 15.5% to 15.1% in the year it earned a record6. Eleven years of heavy investment have not yet produced a better return on capital.

The cash position tells the same story. Free cash flow was $14,923 million in fiscal 2026 against $15,120 million in fiscal 2024 — lower, on $65 billion more revenue — because capital expenditure rose from $20,606 million to $26,642 million7. Walmart returned $15,587 million to shareholders in fiscal 2026, more than it generated8.

At 38 times, a company with three cents of margin has no room for a mistake. A single point of gross margin is worth about $7 billion of gross profit; an extra point of expense growth is worth about $1.5 billion of operating income. Neither is unusual in retailing.

The number that would falsify the price is return on investment. Walmart has told shareholders it expects return on capital to improve over time9. If it is still around 15% in three years, the market paid a platform multiple for a retailer's returns.

The number that tests this threat
Reported
Return on investment
15.1%, down from 15.5%

Walmart's own preferred measure of return on capital fell in the year it earned a record, and the EDGAR-computed ROIC is about 14.0% against 14.3% in fiscal 2015. The market has paid a tripled multiple for a mix argument the return on capital has not yet confirmed.

Source: Walmart Form 10-K, fiscal year ended January 31, 2026 ↗
References
  1. Moat Explorer calcWalmart earns three cents of net profit on every dollar of revenue and trades at roughly 38 times those earnings.
    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 ↗
  2. ReportedWalmart earns three cents of net profit on every dollar of revenue and trades at roughly 38 times those earnings.
    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 ↗
  3. Moat Explorer calcWalmart changed hands at about 13.4 times earnings at the fiscal 2016 year end and at about 40.6 times at the fiscal 2026 year end.
    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 ↗
  4. ReportedOver the five fiscal years to January 2026, $100 invested became $272 against $201 in the S&P 500 and $164 in the index of retailers Walmart belongs to — and almost none of it happened gradually.
    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 ↗
  5. Moat Explorer calcReturn on invested capital was 14.3% in fiscal 2015 and about 14.0% in fiscal 2026; 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 ↗
  6. ReportedReturn on invested capital was 14.3% in fiscal 2015 and about 14.0% in fiscal 2026; 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 ↗
  7. ReportedFree cash flow was $14,923 million in fiscal 2026 against $15,120 million in fiscal 2024 — lower, on $65 billion more revenue — because capital expenditure rose from $20,606 million to $26,642 million.
    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 ↗
  8. ReportedWalmart returned $15,587 million to shareholders in fiscal 2026, more than it generated.
    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 ↗
  9. ReportedWalmart has told shareholders it expects return on capital to improve over time.
    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