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Walmart: Wide Economic Moat, But Current Valuation Is Not Attractive

Jun. 06, 2022 3:29 PM ETWalmart Inc. (WMT)5 Comments
Frederik Mueller profile picture
Frederik Mueller


  • Both my Discounted Cash Flow Model and Relative Valuation Models show that Walmart is currently overvalued.
  • The DCF Model I have used calculates a fair value of $111.69 for Walmart. This results in a downside of 12.5%.
  • The High-Quality Company (HQC) Scorecard for Long-Term Investors I have developed, rates Walmart with 58.40 out of 100 points.
  • My HQC Scorecard demonstrates Walmart's economic moat and its financial strength, but also shows that the Walmart stock is currently not attractive in terms of valuation and growth rates.

Walmart Raises Forecast As Earnings Beat Estimates

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Investment Thesis

  • The strong brand image of Walmart (NYSE:WMT) in combination with its ability to offer its customers lower prices than most of its competitors, provides the company with a wide economic moat.
  • According to
DCF Model

Source: The Author

Appendix 1

Source: The Author

Appendix 2

Source: The Author

Walmart's Dividend

Source: The Author

Composition HQC Scorecard

Source: The Author

HQC Scorecard

Source: The Author

Walmart according to HQC Scorecard

Source: The Author

This article was written by

Frederik Mueller profile picture
In my analyses, I aim to identify companies that have strong competitive advantages over their competitors (for example, a strong brand image, cost advantages, special know how, strong pricing power, a strong distribution network, etc.) in order to support you to find excellent long-term investments. I aspire to help you build an investment portfolio consisting of high-quality companies that are particularly attractive in terms of risk and reward (for example, due to their wide economic moat, high financial strength, high profitability, attractive valuation, growth potential and expected return). I was born in Germany and majored in Business Administration at the University of Mannheim (Germany) and San Diego State University (United States).

Analyst’s Disclosure: I/we have a beneficial long position in the shares of AMZN either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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