Last Updated: March 28, 2022
Do you know that Walmart’s revenue came in at an impressive $559 billion in 2020, while its share price has almost doubled in the past five years? If so, you may already be thinking about how to buy Walmart stock.
We will discuss the company’s history and strategy, the Covid-19 impact on performance, and experts’ expectations. We’ll also cover all steps of buying Walmart shares. So keep reading if you’re interested in investing in this US retail giant!
In 1962, Sam Walton opened the first Walmart in Rogers, Arkansas. He believed the main pillars of a successful retail business were lower prices and excellent service. His competitors were skeptical. But by 1967, Walmart had 24 stores and $12.6 million in sales. Today, the chain operates from 11,443 locations worldwide and generates more than $500 billion in annual sales.
Walton and his company exceeded everyone’s expectations when Walmart went public in 1970. At the initial public offering (IPO) the Walmart stock price was $16.50 per share. The company’s common stock trade began in 1972 on the New York Stock Exchange (NYSE).
Since joining the stock market, the retailer has issued 11 two-for-one stock splits. The most recent one was in 1999 when the price of Walmart stock was $89.75 per share.
The Walmart stock market performance has been more or less steady since 2000. But with the recent rapid development of Amazon and other rivals, Walmart has been facing fierce competition.
Reflecting the more complex competitive map, in 2015 Walmart stock prices posted their largest drop in the company’s history, falling from $90.02 in January to $57.87 in November.
To halt the gloomy trend and meet increased competition, CEO Doug McMillon made a surprising move in 2015. He announced that Walmart would raise the minimum wage from $7.25/hour to $9/hour that April and up to $10/hour the following year.
Wall Street’s reaction to this news was rather negative amid the company’s downbeat earnings per share (EPS) forecast. The stock price for Walmart was declining in the following weeks. Unexpectedly, McMillon’s strategy proved to be a turning point, as the shares’ value has doubled since then.
The pandemic’s effect on Walmart’s stock
Millions of people are losing jobs, and companies are going bankrupt, while Walmart’s performance is going strong day by day. WMT, the Walmart stock symbol, has become a synonym for perseverance despite the recent harsh circumstances.
Retail sales have been rising since the Covid-19 outbreak, with Walmart benefiting from the millions of Americans stocking up on products since March 2020. Still, the question is, what will 2021 bring for the company?
As the pandemic progresses, more and more people are staying without income. This is surely something that will affect Walmart, as consumer power is decreasing.
The Walmart+ launch was one of the company’s major moves in 2020. The online shopping platform complies with all of WHO’s prevention guidelines. Additionally, it allows Walmart’s customers to stay loyal to the brand instead of choosing other online retailers.
Since the beginning of the pandemic, the Walmart stock value has only had minor falls, outperforming many other companies. It’s hard to predict whether that trend will continue. But considering its e-commerce development and high adaptability, the outlook is rather positive.
According to eMarketer data, Walmart’s e-commerce sales made up 5.3% of the overall US online market in 2020, surpassing eBay for the first time.
And what is Walmart’s yearly profit? For the fiscal year ended 31 January 2020, Walmart’s net income amounted to $14.88 billion. This was a 123.1% increase from 2019 and marked the company’s most profitable year so far.
Analysts project the Walmart worth rising trend will continue over the next five years. Earnings are set to climb 8% in fiscal 2021 and 5% in 2022.
The Walmart NYSE stock price has also been steadily rising since 2017. This trend is expected to continue. Yet, Walmart’s history and recent development show that sometimes not even Wall Street experts can predict a company’s stock market performance. McMillon’s bold wage hike strategy could have been the end of Walmart as we know it. Instead, it pushed the company forward and gave it an advantage against its competition.
Walmart Stock Investment
On 27 November 2020, the stock price for Walmart reached an all-time high of $151.60. The estimated return on investment (ROI) was 17.52%. So, let’s say you had purchased 200 shares of Walmart, spending $30,320. With an example of ROI staying the same, 30 years later, you would have gained just over $22,800, with 43% profit over the period.
Sounds good, right? But before deciding to buy Walmart stock, make sure you go through some key consideration points, such as:
- How Walmart stock fits into your trading portfolio?
- Can you afford to trade Walmart stock?
- Is it a good time to invest in Walmart stock?
- What could be the size of your first investment?
- Will you sell, deposit or reinvest your earnings each quarter?
- And finally, choose one of the three investment approach methods – direct investment, broker, or online investment platform.
How to Buy Walmart Stock: A Step-by-Step Guide
If you’re new to stock market investments, you may be wondering how to start. So let’s break down the buying process into five simple steps.
Step 1: Choose an investment method.
First, you need to decide whether you’ll make a direct investment or use a trading platform. Explore your options, get familiar with the commissions and requirements involved.
Step 2: Start a brokerage account.
If you choose to use a trading platform, you will have to fill an application form to open an account. Typically, this involves providing certain personal information, such as name, address, Social Security Number (SSN), etc. Following a verification process, you can proceed with funding your account. Note that many brokerages have a minimum deposit requirement.
Step 3: Look for Walmart stock.
Walmart is listed on the New York Stock Exchange (NYSE). When looking for the stock, you can use the Walmart ticker symbol WMT.
Step 4: Decide when to purchase.
You can buy the shares at the current price or create a limit order and purchase the stock when it reaches your desired price.
Step 5: Keep an eye on your investment.
Now you own a part of Walmart! Make sure you check your Walmart stock dividends eligibility to optimize your portfolio. Monitoring the share price movements is also crucial if you plan on trading your holding.
Walmart Stock Trading Options
When it comes to purchasing Walmart stock, there are three different approach methods:
Direct investment means that you’re buying stock from Walmart. No brokers or online investment companies are involved.
With this method, you place your order through Walmart’s Computershare. The system entails a transaction fee of $25, plus $0.12 per share sold. This is a great advantage, as you don’t need a lot of money to get started.
On the flip side, the commission fees are higher than with some brokerages that offer no-commission trades.
Also, Computershare is an automated platform, which makes it limited in a way. You don’t get to decide on the buying or selling price — the system does that instead of you.
To make a direct Walmart stock purchase, you will need to log in to Computershare or carry it out over the phone. As far as dividends are concerned, you can either reinvest them or have them deposited into your bank account each quarter.
The second method is going through a brokerage firm. Instead of investing in each company’s stock directly, you can do this through a brokerage, all at once. This option also allows you to buy and sell shares within a single day.
We have compiled a list of the top day trading platforms for 2021 :
- Interactive Brokers — Best for intermediate investors
- Fidelity — Best for order execution
- TD Ameritrade — Best desktop trading platform
- E*TRADE — Best for mobile day trading experience
- TradeStation — Best for active traders
- Robinhood — Best for new investors
- Merrill Edge — Best for Bank of America customers
- Zacks Trade — Best for broker-assisted trades
Compared to Computershare, brokerage firms usually allow a no-commission trade. Plus, they give you control when it comes to the trading price. Yet, a brokerage firm is not the best choice for beginners, as you would have to calculate the prices yourself. This can be overwhelming if you lack trading experience. Yet, there are platforms oriented towards investment rookies.
Stock trades at brokerages come in two forms: limit orders and market orders. If you want to buy at the current Walmart stock price, you make a market order and just pick the number of shares you want to purchase. And if the price doesn’t suit you, limit orders give you the freedom to set a specific price that the stock should hit before it becomes a buy or a sell.
The third method, ideal for beginner traders, is getting guidance from a financial advisor. You can seek one-off assistance or use a full-time service to help you with trading.
The downsides of financial advisory companies are that their commissions are usually high. But since they create an entire portfolio for you, it’s valuable input, especially for those with no trading background.
Is Walmart a Good Stock to Buy?
The answer to this question primarily depends on your goals.
One of the USA’s largest retail companies, Walmart is expected to generate more than $550 billion in revenue in 2021. Yet, the company has not been a long-term stock market leader for many years. Investors looking for a high-growth stock should instead focus on companies from the IBD 50 list.
That said, the Walmart stock dividend presents a long-term investment opportunity, with its most recent return on average invested assets of 11.7 % in the third quarter of 2020. Note that this figure is below the company’s average ROI.
In a nutshell, Walmart’s stock growth is slow but steady one. It could bring a profit on the investment, but it might take longer than expected. This could change in the following years, with the launch of Walmart +, as the online shopping platform is already driving further growth at a fast pace.
If you’re building a retirement portfolio, the Walmart dividend could be the perfect choice for you. The company has shown consistency and adaptability over the years, which is a desirable feature for long-term investments.
Benefits of Investing in Walmart Stock
Walmart’s outperformance of the S&P 500 over the years has made it an attractive investment for experienced traders, while the novice ones may now be wondering how to buy Walmart stock.
The Walmart dividends have been rising every year since 1974. With short-term investments and almost $15 billion of free cash flow, the company provides additional opportunities to return capital to shareholders.
By buying Walmart shares, investors can rely on solid dividend stocks, even during a market downturn such as this. Adding new dividends to your portfolio is a great way to ensure stable profitability and income in the current situation since nobody can predict how long the pandemic will impact the stock and economic markets.
What’s the price of Walmart stock?
Before looking at some specific metrics, let’s take a look at Walmart stock price per share on March 16, 2021:
Walmart stock fundamentals
The following metrics can help you gain a better insight as an investor.
Walmart’s P/E ratio
The price-to-earnings ratio (P/E ratio) measures the current Walmart stock price relative to the company’s per-share earnings. As of January 2021, the P/E ratio was 21.10, marking a decrease from its 2020 levels:
- Actual: 29.4
- 2022 Estimates: 25.44
- 2023 Estimates: 24.18
Walmart’s PEG ratio
The price/earnings to growth (PEG) ratio determines the relative trade-off between the Walmart stock price, the earnings per share, and the company’s expected growth.
|Forecast 12 Month Forward PEG Ratio||4.82|
The earnings before interest, taxes, depreciation, and amortization (EBITDA) evaluates the company’s overall operating performance.
- 2020 annual EBITDA was $31.555 billion, a 3.31% decline from 2019.
- 2019 annual EBITDA was $32.635 billion, a 5.39% increase from 2018.
- 2018 annual EBITDA was $30.966 billion, a 5.72% decline from 2017
Is Walmart stock overvalued?
The current P/E ratio shows that investors buying Walmart shares are paying 21.10 times the 2021 estimated earnings. In comparison, the S&P 500 has a median P/E ratio of 14.85. This suggests that Walmart is overvalued.
Yet, there are different calculation models, involving various metrics. According to the Discounted Cash Flow (DCF) valuation by Simply Wall Street, Walmart’s stock is actually undervalued.
Walmart has faced severe challenges since it was founded in 1962. Despite skepticism and experts’ lacklustre response to some of the CEO’s strategic moves, the retail giant has achieved unprecedented success.
So it’s not surprising the Walmart ticker is favored among investors who prefer stability and long-term investments. Given you’re aware of the natural stock market risks, have evaluated the company’s fit into your portfolio, and know how to buy Walmart stocks, the question is not whether but when to start investing.
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