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Can Walmart Connect Keep Powering WMT's Digital Profit Growth?
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Key Takeaways
Walmart Connect grew 43% as U.S. e-commerce sales rose 24% in the fiscal second quarter.
Advertising and membership revenues helped Walmart U.S. e-commerce achieve double-digit margin growth.
Digital ad growth improved Walmart U.S. gross profit mix, while the Vibe deal expanded ad capabilities.
Walmart Inc. (WMT - Free Report) is seeing its digital business become a more meaningful contributor to its overall economics as e-commerce and related commerce solutions continue to expand. Advertising is playing an increasingly important role in that mix, supported by Walmart’s growing online business and broader digital platform capabilities.
In the second quarter of fiscal 2027, Walmart’s global advertising business increased 38%. Walmart U.S. advertising, including VIZIO, also rose 38%, while Walmart Connect grew 43%. The gains came alongside 24% growth in Walmart U.S. e-commerce sales, reflecting strength in store-fulfilled delivery, advertising and marketplace.
The profitability picture is also improving. Walmart U.S. e-commerce achieved double-digit incremental margins in the first half of fiscal 2027. Strong advertising and membership revenues contributed to that progress, along with greater delivery-network density, growth in fee-based fast deliveries and benefits from automation.
Advertising also supported Walmart U.S. business mix during the quarter. The company said a better business mix, primarily from growth in digital advertising, contributed to gross profit improvement. Walmart also expanded its advertising capabilities through the acquisition of Vibe, which provides self-service tools and enables advertisers to measure results against shopping behavior.
The second quarter shows that advertising is becoming a more important part of Walmart’s improving digital economics. Walmart Connect’s 43% growth, together with continued e-commerce expansion, supported the broader shift toward commerce solutions. Continued progress in these areas will remain important to Walmart’s ability to sustain the incremental-margin improvement already achieved in its U.S. e-commerce business.
What Do the Latest Metrics Say About Walmart?
Walmart, which competes with Costco Wholesale Corporation (COST - Free Report) and Target Corporation (TGT - Free Report) , has seen its shares gain 1.8% over the past year compared with the industry’s breakeven performance. Shares of Costco have climbed 1%, while Target has surged 71.4% in the aforementioned period.
Image Source: Zacks Investment Research
From a valuation standpoint, Walmart's forward 12-month price-to-earnings ratio stands at 33.82, higher than the industry’s 30.74. The company is trading at a premium to Target (with a forward 12-month P/E ratio of 15.68) while trading at a discount to Costco (40.03).
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Walmart’s current fiscal-year sales and earnings per share implies year-over-year growth of 5.4% and 8.7%, respectively.
View the Zacks #1 Rank List
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Can Walmart Connect Keep Powering WMT's Digital Profit Growth?
Key Takeaways
Walmart Inc. (WMT - Free Report) is seeing its digital business become a more meaningful contributor to its overall economics as e-commerce and related commerce solutions continue to expand. Advertising is playing an increasingly important role in that mix, supported by Walmart’s growing online business and broader digital platform capabilities.
In the second quarter of fiscal 2027, Walmart’s global advertising business increased 38%. Walmart U.S. advertising, including VIZIO, also rose 38%, while Walmart Connect grew 43%. The gains came alongside 24% growth in Walmart U.S. e-commerce sales, reflecting strength in store-fulfilled delivery, advertising and marketplace.
The profitability picture is also improving. Walmart U.S. e-commerce achieved double-digit incremental margins in the first half of fiscal 2027. Strong advertising and membership revenues contributed to that progress, along with greater delivery-network density, growth in fee-based fast deliveries and benefits from automation.
Advertising also supported Walmart U.S. business mix during the quarter. The company said a better business mix, primarily from growth in digital advertising, contributed to gross profit improvement. Walmart also expanded its advertising capabilities through the acquisition of Vibe, which provides self-service tools and enables advertisers to measure results against shopping behavior.
The second quarter shows that advertising is becoming a more important part of Walmart’s improving digital economics. Walmart Connect’s 43% growth, together with continued e-commerce expansion, supported the broader shift toward commerce solutions. Continued progress in these areas will remain important to Walmart’s ability to sustain the incremental-margin improvement already achieved in its U.S. e-commerce business.
What Do the Latest Metrics Say About Walmart?
Walmart, which competes with Costco Wholesale Corporation (COST - Free Report) and Target Corporation (TGT - Free Report) , has seen its shares gain 1.8% over the past year compared with the industry’s breakeven performance. Shares of Costco have climbed 1%, while Target has surged 71.4% in the aforementioned period.
Image Source: Zacks Investment Research
From a valuation standpoint, Walmart's forward 12-month price-to-earnings ratio stands at 33.82, higher than the industry’s 30.74. The company is trading at a premium to Target (with a forward 12-month P/E ratio of 15.68) while trading at a discount to Costco (40.03).
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Walmart’s current fiscal-year sales and earnings per share implies year-over-year growth of 5.4% and 8.7%, respectively.
Walmart currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.