These are top 10 stocks traded on the Robinhood UK platform in July
Tuesday, Walmart (NYSE:WMT)’s prospects in the e-commerce sector are being examined by industry analysts, as the retail giant, currently valued at $740.84 billion, continues to grow and improve profitability in comparison to its largest competitor, Amazon (NASDAQ:AMZN). According to InvestingPro data, Walmart has demonstrated impressive momentum with a 55.39% return over the past year, though current analysis suggests the stock may be trading above its Fair Value. A Bernstein analyst has provided insights into Walmart’s trajectory, highlighting the company’s resilience amid economic uncertainties and its potential for e-commerce led profitability improvement.
Walmart has been performing well, with its stock trading at 37.91 times price-to-earnings (P/E) and 8.14 times book value, a significant premium compared to Amazon’s metrics. This higher valuation reflects Walmart’s robust e-commerce growth, with revenue increasing by 5.07% over the last twelve months, and a perceived underestimation of its profitability improvement potential by the sell-side. When considering e-commerce led profitability improvements, Walmart’s valuation appears more justified, though InvestingPro analysis reveals 13 additional key metrics that could impact future performance.
The retailer’s U.S. e-commerce division has seen a growth rate of over 20%, and analysts expect this to continue as Walmart expands its reach to more households and its third-party (3P) marketplace. Currently, Walmart’s U.S. e-commerce subsidized contribution margin is estimated at +0.5%, in contrast to Amazon’s domestic retail margins, which are around 6% inclusive of advertising revenue. Through initiatives such as growing retail media and cutting fulfillment and delivery costs, Walmart’s e-commerce contribution margin could improve to 6.9%, with further potential upside from automation.
Amazon maintains a strong position in the e-commerce market, with a leading share in the U.S. and a rapidly growing advertising business. The company’s fulfillment network is considered best-in-class, offering a wide product range at competitive prices. Amazon continues to innovate, with efforts to optimize its network and increase the use of automation and robotics in its fulfillment centers, which could lead to further margin improvements.
Both Walmart and Amazon are seen as long-term structural winners in the e-commerce space. While Amazon is expected to keep leading in non-grocery categories and pursue margin gains through logistics and automation advancements, Walmart is poised to lead in e-grocery and enhance its e-commerce profitability through similar strategies.
In a potential economic downturn, Walmart is expected to remain resilient, especially with its price leadership in high-frequency grocery categories and its appeal as a trade-down option for higher-income consumers. This resilience is underscored by Walmart’s strong financial health score from InvestingPro, consistent dividend growth for 30 consecutive years, and moderate debt levels, making it a prominent player in the Consumer Staples sector. For detailed analysis of Walmart’s market position and future prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. Amazon, on the other hand, has been increasing its share in more defensive categories like everyday essentials but lacks the scale in grocery that Walmart has. Amazon’s Prime subscriptions are also anticipated to be defensive, given their competitive pricing and fast, free delivery for over 180 million subscribers.
In other recent news, Walmart Inc. has been the focus of several analyst evaluations following its Investment Community Meeting in Dallas, Texas. RBC Capital Markets adjusted their price target for Walmart to $102, citing potential challenges in the sales landscape and uncertainty surrounding tariffs, though they maintained an Outperform rating. Similarly, UBS lowered its price target to $110 while maintaining a Buy rating, emphasizing Walmart’s ability to navigate various market conditions and its strategic long-term goals. Raymond (NSE:RYMD) James also reduced its price target to $105 but kept an Outperform rating, highlighting Walmart’s ongoing transformation towards automation and a high-margin business mix. BMO Capital Markets, on the other hand, maintained its price target at $110 and reiterated an Outperform rating, praising Walmart’s strategic direction and technological advancements in supply chain automation.
These adjustments come amid Walmart’s efforts to enhance profitability through various initiatives, including automation and membership programs. Despite the lowered price targets, analysts remain optimistic about Walmart’s ability to adapt to changing market dynamics and maintain a strong competitive position. The company’s reaffirmation of its financial guidance for 2026 reflects confidence in its resilience and growth potential. These developments are crucial for investors to consider as they assess Walmart’s future performance in the retail sector.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.