WMT - Overvalued - CEO Retiring - What Next?

Walmart demonstrates exceptional operational strength with impressive 25.3% net income growth and consistent earnings performance, supported by successful digital transformation and strong market positioning.

Here's a hard truth... these positive fundamentals are overshadowed by valuation concerns that appear unsustainable for a mature retail business.

The assessment of overvaluation centers on elevated multiples including a 40.6 P/E ratio and 62.3 P/FCF ratio, which significantly exceed historical norms for the retail sector. Discounted cash flow models consistently indicate substantial premiums to fair value estimates, ranging from 62% to 153% above intrinsic value calculations. This valuation disconnect suggests the market has priced in optimistic growth expectations that may be difficult to sustain. (Sound familiar? It should)

While Walmart maintains excellent defensive characteristics and operational momentum, current price levels present limited upside potential and meaningful downside risk. I'm going to have a "hold" recommendation reflecting my view that existing shareholders should maintain positions given the company's strong fundamentals, but new capital should await more attractive entry points.

I would be much more confident if we were closer to the 38.2% fibonacci pullback around $97 or what would be even better would be $90-$93 which is at the 61.8% and 50% pullback, respectively.