There are currently eight publicly traded companies with market capitalizations of $1 trillion or more. Nvidia, apple, microsoft, alphabet, Amazon, meta platform, teslaand Berkshire Hathaway.
These stocks are very famous, and for good reason. It has made many investors rich. However, none of these stocks are particularly known as dividend stocks, and so far, the Trillion Dollar Club has excluded stocks that have been paying dividends for many years. However, that could change quickly.
walmart (WMT 2.32%)The world's largest retailer and the world's largest company by revenue, the company has quietly eclipsed the rest of the retail industry in recent years with its commitment to omnichannel sales and reputation for everyday low prices. Meanwhile, many of its peers are struggling with inflation and weak consumer spending.
Walmart reported another strong quarterly result Tuesday morning. Sales growth was strong across the board, with same-store comps at U.S. stores increasing 5.3% (excluding fuel), the company's best performance in at least five quarters. Sam's Club, the membership warehouse retail chain, also reported a 7% increase in revenue excluding fuel.
Fixed-currency revenue in the international division, a historically challenging segment for the company, rose 12.4% to $30.3 billion. Overall sales rose 5.5% to $169.6 billion, beating the consensus of $166.6 billion.
The retailer also saw solid margin improvement, with gross margins increasing 21 basis points to 24.2%, driven by lower markdowns in U.S. stores and strong inventory management. Operating income increased 8.2% to $6.7 billion, with overall operating margin expansion. Adjusted earnings per share (EPS) rose from $0.51 to $0.58, beating the consensus of $0.53.
Walmart's stores performed well, but it also benefited from emerging growth businesses such as advertising, where sales rose 28%, and global e-commerce also helped Amazon and other competitors gain market share. , sales remained strong with a 27% increase.
The company also raised its outlook, indicating increased confidence in the holiday quarter. The company now expects net sales to increase 4.8% to 5.1% and full-year adjusted EPS of $2.42 to $2.47.
Image source: Getty Images.
Can Walmart reach $1 trillion?
Walmart's market cap surpassed $700 billion for the first time on Tuesday, Nov. 19, meaning the company's market cap is nearing $1 trillion. At its current valuation, the stock would only need to grow by 43%, which seems achievable given its recent momentum. The stock is currently up 66% since the beginning of the year, but it will be difficult to repeat that performance next year.
Right now, the biggest risk to the stock appears to be its valuation. Based on this year's EPS guidance, the company's stock trades at a multiple of 35 times earnings, which is significantly higher than most of its retail peers and on par with the largest tech companies in the $1 trillion market. are. Clubs like Microsoft and Apple.
Walmart has earned its premium thanks to recent business execution and a track record of steady growth and profit expansion. Ten years ago, many thought the company would be pushed aside by Amazon, but the company has built an omnichannel business, developed new growth opportunities such as advertising, and improved in areas such as price and convenience. We have responded to this challenge by strengthening our competitive advantage.
As Walmart's valuation has skyrocketed, its dividend yield has fallen to just 1%, but the company's track record of dividend increases is unmatched by any company in the $1 trillion club. The company has increased its dividend every year for 51 consecutive years, making it the Dividend King.
Is Walmart a buy?
Walmart's third-quarter earnings report was virtually perfect, reminding investors that the company still enjoys several competitive advantages, including economies of scale. A recession-proof business model focused on food and groceries. Growth opportunities in advertising, e-commerce and more.
While the stock may seem expensive at its current valuation, the company has just proven its ability to grow in a difficult environment. The company has increased its focus on general merchandise and appears poised to continue its steady growth toward a $1 trillion market cap. If you're looking for a balance between growth and income, Walmart seems like the right choice.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool's board of directors. Alphabet executive Suzanne Frye is a member of The Motley Fool's board of directors. Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool's board of directors. Jeremy Bowman holds positions at Amazon and Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, Tesla, and Walmart. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
