Where Will Walmart Stock Be in 3 Years?

If you've owned Walmart (NYSE: WMT) shares since early 2022, then you're likely thrilled with your results. The retailer's stock more than doubled the S&P 500's return over that time, delivering nearly 100% returns in the three years that ended on Jan. 23, 2025.

That market-thumping performance didn't just boil down to industry growth, as peers including Target and Kroger returned less than 30% in the period. Only Costco came close to Walmart's stellar returns since early 2022.

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Is the chain destined to leave its rivals in the dust again over the next several years, or are the stock's best days behind it? Let's take a closer look.

Walmart's ingredients for success

You can trace Walmart's great stock performance back to its excellent business trends. Those showed up mainly in market share growth, e-commerce gains, and rising profitability. Let's briefly review each trend to see whether Walmart can extend its positive momentum toward 2027.

On market share, Walmart has found a way to expand the business even as peers endured a pullback when consumers cut costs in response to high inflation. The most recent quarter is a great example, with comparable-store sales up 5% through late October 2024. Target's comps were flat, and Kroger's gains were just 2%. Walmart's value focus has been a major draw for consumers lately.

But investors have been especially pleased with Walmart's e-commerce success. That channel crossed $100 billion in annual sales last year and was up 27% last quarter. A thriving e-commerce division is also lifting traffic at stores, since many customers decide to shop in person as they pick up orders. Customer traffic was up a healthy 3% in the U.S. last quarter.

Finally, there's the profit margin, which has been lifted by those rising digital sales, along with higher membership fees. Walmart's operating profit margin is climbing back toward the 5% high that investors saw in 2022.

What to watch in February

The big question heading into Walmart's Feb. 20 earnings report is whether those positive factors kept lifting the business through the critical holiday shopping season. It's likely that they did, given that management raised its fiscal year outlook in mid-November. Investors are looking for Walmart to report net sales growth of around 5% and adjusted operating profit gains of as much as 9.25%.

Achieving those strong results, of industry-leading growth plus expanding profit margin, will be the first step toward Walmart's continued outperformance.

That said, the stock's pricey valuation could make it harder for investors to see strong returns. You'll have to pay 1.1 times sales for Walmart stock right now, up from 0.75 times sales a few years ago. Other successful retailers like Costco have seen their stock valuations climb to new highs as well, but there's a good chance that the wider industry, if not the entire market, is due for some lackluster returns following the huge rally in the S&P 500 in both 2023 and 2024.

Still, Walmart is a good candidate for many investors' portfolios. The retailer just demonstrated that it can perform well even while many consumers are pulling back on their spending. And its e-commerce unit is finally set to start contributing to the annual earnings pool in 2025 and beyond. While it isn't likely to quickly double in value again, Walmart stock is primed to keep delivering good returns for patient shareholders over the coming years.

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Demitri Kalogeropoulos has positions in Costco Wholesale. The Motley Fool has positions in and recommends Costco Wholesale, Target, and Walmart. The Motley Fool recommends Kroger. The Motley Fool has a disclosure policy.