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On Friday, Deutsche Bank reiterated its Buy rating on Walmart shares (NYSE:WMT), maintaining a price target of $77.00. The firm's assessment highlighted Walmart International's strong performance, particularly noting significant growth in key markets such as Mexico and China, as well as the e-commerce sector.
Walmart's international success was underscored by a solid quarter from Walmex, China, and Flipkart. Comparable store sales (SSS) rose by 6.2%, a slight deceleration from the 8.2% seen in the previous quarter, yet impressive nonetheless. This growth was attributed to sustained demand in food and consumables, coupled with an uptick in general merchandise sales. Additionally, Walmart's adjusted earnings before interest and taxes (EBIT) grew at a rate surpassing that of sales.
In China, the retailer achieved a remarkable 13.8% increase in SSS, contributing to a total sales jump of 17.7%. Walmex also reported robust figures, with a 5.0% rise in comparable sales and a 6.4% increase in total sales. The Canadian market posted a 3.4% growth in SSS alongside a 3.5% rise in total net sales.
E-commerce growth remained strong, marking an 18% increase and the third consecutive quarter of double-digit expansion. This growth was led by store-fulfilled pickup and delivery services, as well as the marketplace platform, with e-commerce penetration improving across all markets. Advertising revenue in the international segment grew by 23%, a slight decrease from the previous quarter but still reflecting a robust expansion.
Despite the positive outlook, Walmart's third-quarter guidance fell short of consensus estimates, citing a shift in the timing of the Big Billion Days event, which will entirely fall into the fourth quarter this year, compared to the last year's split.
Deutsche Bank's note concluded with an optimistic view of Walmart International's trajectory, emphasizing the segment's strong performance, particularly in China and Flipkart, its capacity to generate profit growth outpacing sales, and improving e-commerce margins. For a detailed analysis of Walmart's overall performance in the second quarter, Deutsche Bank referred readers to its comprehensive report titled "Riding the Bull Wave."
In other recent news, Walmart Inc. has been garnering positive attention from financial institutions and analysts. The retail giant's second-quarter earnings surpassed expectations, with earnings of 67 cents per share and a revenue increase of 4.8% to $169.3 billion. Walmart's strategic shift towards integrating convenience through enhanced e-commerce capabilities has been recognized, with a significant 22% rise in U.S. online sales.
Analysts from Roth/MKM, BofA Securities, Citi, DA Davidson, and CFRA have expressed confidence in the company's growth trajectory, with Roth/MKM and BofA Securities raising their price targets to $81 and $85 respectively.
The company's investments in its supply chain, automation, and digital marketplace offerings are expected to improve sales and gross margins.
Walmart's board has also welcomed Bob Moritz, the retired Chairperson of PricewaterhouseCoopers, who will serve on both the Audit Committee and the Technology and eCommerce Committee. Amid economic uncertainty, the company has adjusted its holiday promotions and reduced jobs at its headquarters.
These recent developments reflect Walmart's resilience and strategic planning in the face of potential economic challenges.
InvestingPro Insights
Recent data from InvestingPro offers a deeper dive into Walmart's financial health and stock performance. With a robust market capitalization of $588.63 billion, Walmart stands as a heavyweight in the retail sector. The company's P/E ratio is currently at 35.78, suggesting a premium valuation compared to near-term earnings growth. However, the adjusted P/E ratio for the last twelve months as of Q2 2025 is slightly lower at 32.86, with a PEG ratio indicating that the stock may be undervalued relative to its earnings growth (0.46).
InvestingPro Tips highlight Walmart's impressive history of raising dividends, with the company increasing its dividend for 52 consecutive years, showcasing its commitment to returning value to shareholders. Additionally, Walmart has demonstrated a significant return over the last week, with a 7.7% price total return, hinting at current investor confidence in the stock. For investors seeking a comprehensive list of insights, InvestingPro features over 15 additional tips on Walmart, providing a valuable resource for a more informed investment strategy.
It's important to note that while some analysts have revised their earnings expectations downwards for the upcoming period, the company's revenue growth remains healthy at 5.43% over the last twelve months as of Q2 2025. This aligns with the strong international performance noted by Deutsche Bank, particularly in markets such as Mexico and China. The InvestingPro Fair Value estimate of $60.93 suggests that investors should keep an eye on the stock's price movements in relation to its intrinsic value.
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