It shouldn't come as a surprise that the world's largest company by revenue has a large debt burden.
Walmart (WMT 0.04%) is the biggest company by revenue on the planet, but the thousands of superstores it operates don't come without costs.
Walmart has over 2 million employees and spends billions of dollars on capital expenditures each year to maintain and refurbish its stores and distribution centers, and build new ones.
In order to fund those expenditures, the company has taken on a lot of debt. Currently, it has $39.6 billion worth of long-term debt on its balance sheet, $3.45 billion of which is due in the next year.
Image source: Walmart.
Walmart paid $2.3 billion in interest on that debt last year, but it generated $27 billion in operating income and $15.1 billion in free cash flow. So while the interest expense does take a significant bite out of its profits, Walmart should have no problem affording that debt in the future.
The giant retailer also has formidable competitive advantages due to its economies of scale and low-cost products, and it has an all but recession-proof business model. Its reputation for everyday low prices means that consumers visit its stores in part to save money.
Walmart has also withstood a significant challenge from Amazon, building an e-commerce business that now generates more than $100 billion in revenue annually.
Finally, Walmart has a strong balance sheet, showing that it should be able to withstand even a severe economic shock. It finished the fourth quarter with $9.9 billion in cash and equivalents as well as $76.9 billion in current assets, meaning assets that are expected to be converted into cash in the next year.
With a nearly recession-proof business model, strong profits, and a solid balance sheet, Walmart can easily afford its $40 billion in debt -- a financial position that should please and reassure its investors.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jeremy Bowman has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Walmart. The Motley Fool has a disclosure policy.
FAQs
Walmart paid $2.3 billion in interest on that debt last year, but it generated $27 billion in operating income and $15.1 billion in free cash flow. So while the interest expense does take a significant bite out of its profits, Walmart should have no problem affording that debt in the future.
How much long-term debt does Walmart have? ›
41.8B USD. Based on the financial report for Jan 31, 2024, Walmart Inc's Long-Term Debt amounts to 41.8B USD.
Is Walmart financially healthy? ›
Finally, Walmart has a strong balance sheet, showing that it should be able to withstand even a severe economic shock. It finished the fourth quarter with $9.9 billion in cash and equivalents as well as $76.9 billion in current assets, meaning assets that are expected to be converted into cash in the next year.
Does Walmart have a lot of debt? ›
Total debt on the balance sheet as of January 2024 : $61.32 B. According to Walmart's latest financial reports the company's total debt is $61.32 B. A company's total debt is the sum of all current and non-current debts.
What is the future of Walmart stock? ›
Based on short-term price targets offered by 34 analysts, the average price target for Walmart comes to $72.17. The forecasts range from a low of $58.33 to a high of $81.00. The average price target represents an increase of 6.76% from the last closing price of $67.60.
Is Walmart a good long term investment? ›
This helps explain why each stock was selected and why we believe it's a good pick for the long-term. The portfolio's past performance only solidifies why investors should consider it as a starting point. For 2020, the Focus List gained 13.85% on an annualized basis compared to the S&P 500's return of 9.38%.
What is Walmart's biggest liability? ›
The greatest single cost for Walmart is labor. Walmart has a well-known history of labor disputes and a strong anti-union culture.
What is Walmart's biggest asset? ›
“Our biggest asset is the 4,000 stores that we have across the nation. “We thought about how consumers use mobile – they are bringing them to the stores, they are checking prices, they are looking at content – they are doing all sorts of things in our stores on mobile devices.
Who owns the most percent of Walmart? ›
FAQ. Jim Walton owns the most shares of Walmart (WMT).
What is Walmart's debt leverage? ›
Walmart's operated at median financial leverage of 3.1x from fiscal years ending January 2020 to 2024. Looking back at the last 5 years, Walmart's financial leverage peaked in January 2023 at 3.2x. Walmart's financial leverage hit its 5-year low in January 2022 of 2.9x.
Walmart stock price stood at $67.60
According to the latest long-term forecast, Walmart price will hit $90 by the end of 2025 and then $95 by the end of 2026. Walmart will rise to $100 within the year of 2027, $110 in 2028, $125 in 2029 and $150 in 2031.
How much will Walmart stock be worth in 2025? ›
Long-Term Walmart Stock Price Predictions
| Year | Prediction | Change |
|---|
| 2025 | $ 72.83 | 8.24% |
| 2026 | $ 78.82 | 17.15% |
| 2027 | $ 85.32 | 26.80% |
| 2028 | $ 92.34 | 37.24% |
2 more rowsInvesting $1,000 In Walmart IPO: Walmart offered shares for $16.50 on Oct. 1, 1970 for its IPO. A $1,000 investment could have purchased 60.61 shares of Walmart stock.
What is Walmart's cost of debt? ›
As of Apr. 2024, Walmart's interest expense (positive number) was $2733 Mil. Its total Book Value of Debt (D) is $64838.2 Mil. Cost of Debt = 2733 / 64838.2 = 4.2151%.
How much debt is Walmart in 2024? ›
Walmart long term debt for the quarter ending April 30, 2024 was $41.841B, a 5.95% increase year-over-year. Walmart long term debt for 2024 was $41.841B, a 5.95% increase from 2023. Walmart long term debt for 2023 was $39.492B, a 0.98% increase from 2022.
What is Walmart's debt load? ›
To get started, take your debit or prepaid card to a staffed register along with the cash you want to load onto it. The amount you load can be from $20 up to $1,000, depending on how much your card issuer will allow. Fees vary from $0 to $3.74 per transaction based on the type of debit card.
