Analysis of the Form 10-K | Fiscal year ended January 31, 2026
What does Walmart sell, to whom, and how does a dollar spent at the till reach the shareholder?
Walmart is a mass retailer of groceries, general merchandise and health products, sold through 10,955 stores and clubs in 19 countries and through its websites and apps. Fiscal 2026 total revenues were US$713,163 million, of which US$706,413 million were net sales and US$6,750 million membership and other income. The 10-K reports three segments: Walmart U.S. (4,611 stores), Walmart International (5,743 units in 18 countries) and Sam's Club U.S. (601 membership-only warehouse clubs). Corporate overhead not allocated to segments sits in "Corporate and support". All figures in this report are in US$ millions unless stated and come from the fiscal 2026 10-K unless another document is named.
| Net sales by segment | FY2026 | Share | FY2025 | FY2024 | Change FY2026 |
|---|---|---|---|---|---|
| Walmart U.S. | 482,975 | 68.37% | 462,415 | 441,817 | +4.45% |
| Walmart International | 130,423 | 18.46% | 121,885 | 114,641 | +7.00% |
| Sam's Club U.S. | 93,015 | 13.17% | 90,238 | 86,179 | +3.08% |
| Total | 706,413 | 100.00% | 674,538 | 642,637 | +4.73% |
The segment mix barely moved: the company itself says each segment has kept a "consistent contribution rate" to net sales, with currency explaining the small shifts in International. The geographic split the 10-K gives is U.S. against everything else, on total revenues, and the non-U.S. share is the same figure as the International segment.
| Total revenues by geography | FY2026 | Share | FY2025 | FY2024 | Change FY2026 |
|---|---|---|---|---|---|
| U.S. operations | 581,175 | 81.49% | 557,622 | 532,076 | +4.22% |
| Non-U.S. operations | 131,988 | 18.51% | 123,363 | 116,049 | +6.99% |
| Total | 713,163 | 100.00% | 680,985 | 648,125 | +4.73% |
Follow one sale. Walmart sets the shelf price itself under its "everyday low prices" policy and records the ticket, net of sales taxes and expected returns, as net sales. Out of each dollar it pays 75.79 cents in cost of sales, which includes the merchandise and the cost of moving it to stores and customers, reduced by allowances and rebates paid by suppliers. A further 20.94 cents goes on operating expenses (labor, depreciation, occupancy, advertising), leaving 4.22 cents of operating income. To make that sale Walmart must own or lease the store, the distribution centers and the inventory: property and equipment alone is US$136,083 million, 47.80% of total assets. On top of the merchandise margin sits a second, smaller stream: membership fees, rent, recycling and gift card breakage, which together equal 22.63% of operating income. The document does not say what this stream costs to deliver.
The evidence for a durable advantage is in the price and in the fees. The gross profit rate rose from 23.73% in fiscal 2024 to 24.21% in fiscal 2026 while comparable sales stayed positive in both U.S. segments, so price leadership did not require a falling margin in the years presented. Membership fee revenue grew from US$3.1 billion to US$4.4 billion over the same two years; the document attributes the growth to Walmart+ and to the Sam's Club membership base and Plus penetration, and gives no member counts. No single customer is material, and the company says less than one third of what it sells in the U.S. is imported. The rest is the company's own claim: scale lets suppliers sell "significant quantities" to Walmart in exchange for lower prices. The 10-K does not disclose research and development spending, member counts, renewal rates or the profitability of eCommerce, so whether the advantage is widening or narrowing cannot be established from this document.
At January 31, 2026 the company had approximately 2.1 million associates, 1.6 million of them in the U.S. Management changed at the top during the filing period: John Furner became President and CEO in February 2026 and signed the 10-K, succeeding Doug McMillon, who signed as a director; the three segment CEOs and the Controller are also new in their roles from February 2026.
A newcomer reading the revenue line sees a US$713 billion business and expects large profits from it. The profit is thin and partly sits outside the merchandise: at Sam's Club U.S., membership and other income of 2,525 exceeds the segment's entire operating income of 2,442.
What kind of company is Walmart in this filing, and where is its case decided?
Walmart is a solid company in the categories used here. Net sales grew 4.73% in fiscal 2026 and 4.96% in fiscal 2025. The operating margin stayed between 4.20% and 4.35% across the three years presented. The balance sheet carries net financial debt of 0.86 times EBITDA and long-term ratings of AA and Aa2. It is not a slow-grower held for its dividend: dividends absorbed 34.29% of net income to Walmart, while capital expenditure of 26,642 was 3.5 times the dividend and is where most of the cash goes.
For a solid company the question is what is being paid for and how durable the margin is that justifies it. Three questions decide this case.
The first is whether the margin is moving the way the company says it will. Management's stated objective is operating income growing faster than net sales. In fiscal 2026 operating income grew 1.63% against net sales growth of 4.73%. The question is how much of the gap comes from charges the document names and how much from the cost of the model itself. Section 3 goes to depth here.
The second is whether the step-up in capital spending is earning a return. Capital expenditure was 1.88 times depreciation and the company's own ROI fell from 15.5% to 15.1%. This question is only partly answerable: the document separates new stores from remodels and from "supply chain, customer-facing initiatives, technology and other", and it discloses construction in progress, but it does not say when projects enter service or what they earn. Section 6 goes to depth here.
The third is how much of the cash growth will repeat. Operating cash flow rose 14.05% while operating income rose 1.63%, and the company attributes the difference to lower cash taxes and the "timing of certain payments". The answer decides whether free cash flow of 14,923 is a base or a peak. Section 4 goes to depth here.
The model reduces to two pairs. For Walmart U.S., the pair is net sales and operating income per dollar of net sales, read together with the split between eCommerce and the rest. For Walmart International, the pair is the same, with the PhonePe charge isolated. Sam's Club U.S. moved operating income by 38 and Corporate and support by −439: neither has a volume of its own to pair, and each gets one line in section 3. The document publishes no unit counts for transactions, average ticket or members, so the physical half of each pair is not constructible; net sales stand in for volume and this is declared.
Several standard metrics say little here. Diluted EPS growth of 13.28% is not a measure of operating progress, because a swing in investment fair values explains most of it. Gross margin comparisons with other retailers are not meaningful because the company puts part of its distribution costs in operating expenses rather than cost of sales, and says so. Book value is not a support for the price: tangible equity is 66,582 against a market capitalization of 949,832.
Which lines moved the result in fiscal 2026, and what moved them?
Management gives four explanations. (1) Net sales rose because of "growth in average ticket and transactions", with unit volumes up and strength "in all merchandise categories" at Walmart U.S. (2) The gross profit rate rose 8 basis points on "disciplined inventory management, as well as growth in higher margin businesses globally", partly offset by mix shifts into lower-margin categories and channel and format shifts abroad. (3) Operating expenses rose 20 basis points as a share of net sales, "primarily due to" higher self-insured general liability claims in the U.S. of approximately 0.9 billion, a 0.7 billion charge to modify share-based compensation at PhonePe, and higher depreciation from capital investment. (4) Other gains of 2.1 billion came from changes in the fair value of equity investments.
Each holds against the statements. The gross profit rate went from 24.133% to 24.209%, a rise of 7.6 basis points. The operating expense rate went from 20.738% to 20.943%, and depreciation and amortization rose 1,230. The full statement, every line and every year with its source, is in Financials → Income statement on this company's page.
| Income statement | FY2026 | FY2025 | FY2024 | Change FY2026 |
|---|---|---|---|---|
| Total revenues | 713,163 | 680,985 | 648,125 | +4.73% |
| Gross profit | 171,018 | 162,785 | 152,495 | +5.06% |
| Operating expenses | 147,943 | 139,884 | 130,971 | +5.76% |
| Operating income | 29,825 | 29,348 | 27,012 | +1.63% |
| Interest, net | 2,431 | 2,245 | 2,137 | +8.29% |
| Other (gains) and losses | (2,075) | 794 | 3,027 | swing of 2,869 |
| Income before income taxes | 29,469 | 26,309 | 21,848 | +12.01% |
| Provision for income taxes | 7,199 | 6,152 | 5,578 | +17.02% |
| Net income attributable to Walmart | 21,893 | 19,436 | 15,511 | +12.64% |
| Diluted EPS (US$) | 2.73 | 2.41 | 1.91 | +13.28% |
The three named cost items add up to about 2.8 billion of an operating expense increase of 8,059. Removing them leaves operating expenses up 3.74%, slower than net sales; the arithmetic is in the data tables. That construction is not a normalization. Self-insurance is a recurring cost whose reserve also rose (section 7), and depreciation has risen in every year presented while capital spending exceeded it. What the construction shows is narrower: the rest of the cost base grew more slowly than sales, so the missing operating leverage of the year is concentrated in claims costs, a charge at a subsidiary and the depreciation of the investment program.
Below operating income the year was made by investment marks. Pre-tax income excluding other gains and losses was 27,394, against 27,103 a year earlier, a rise of 1.07%. The 12.64% rise in net income to Walmart therefore rests mainly on a fair value swing of 2,869 on a portfolio worth 5,675. The company estimates that a 10% change in the underlying share prices moves that portfolio by about 0.4 billion. A smaller share for minority holders also contributed: it fell from 721 to 377, and the document does not explain the decline.
Membership and other income, the fee stream described in section 1, grew 303, or 4.70%, which hides two opposite movements. Membership fees rose by about 0.6 billion, 15.8%; the other components (rent, recycling, gift card breakage) fell by about 0.3 billion, with lower recycling income named as one cause. At Walmart U.S. the line grew only 1.16% despite what the company calls "double-digit growth in membership fee revenue from Walmart+". Sam's Club U.S. benefited from "additional breakage income related to unredeemed Sam's Cash rewards", a gain that depends on members not using what they earned.
For Walmart U.S., the first pair is net sales and operating income per dollar of those sales. Net sales are what customers paid for goods and services in the segment's stores and on its digital channels, net of returns and sales taxes; they include services such as advertising and fulfillment sold to brands and marketplace sellers. Operating income per dollar is what is left after merchandise, transport, labor, occupancy and the segment's share of corporate costs. Both halves come from Note 11. Net sales went from 441,817 in fiscal 2024 to 482,975 in fiscal 2026. Over the same years, operating income per dollar went from 5.014% to 5.165% and then to 5.209%.
The decomposition the document allows is between eCommerce and everything else, and between gross margin and operating expenses. eCommerce net sales were approximately 99.6 billion, up 25.60% from 79.3 billion. The segment's net sales rose 20,560 in total, so sales not attributed to eCommerce moved from about 383.1 billion to 383.4 billion: flat, within the rounding of the company's figures. The company's own comparable sales say the same thing: eCommerce contributed approximately 4.3 points to comparable growth of 4.3%. This is a channel measure, not a store count: the company classifies as eCommerce every sale "initiated digitally", including orders fulfilled from stores, and also certain advertising, fulfillment and data services. By category, grocery added 9,479 and health and wellness 7,455, the latter growing 12.01%. General merchandise grew 1.00%.
The mechanism that moves the pair runs through both lines. The gross profit rate rose 22 basis points to 27.458%, which the company attributes to inventory discipline and higher-margin businesses, against a mix shift toward lower-margin categories. The document does not say which categories carry the lower margins. The operating expense rate rose from 22.637% to 22.792% on self-insured claims and depreciation, and the store base barely changed (4,611 against 4,605), and the capital allocation table points the spending to supply chain, technology and remodels rather than to new stores. The net effect was a margin up 4.4 basis points, and segment operating income grew 5.34% against net sales up 4.45%: at Walmart U.S. the operating leverage the company aims for did appear, though narrowly.
The company does not publish the components that would close the loop: advertising revenue, marketplace revenue, eCommerce profitability, transaction counts, average ticket, Walmart+ members. The "Other" category of net sales, which grew 23.92% to 12,886, is not defined in the notes.
For Walmart International, the second pair is the segment's net sales and its operating income per dollar. Net sales grew 7.00% to 130,423, or 9.30% before an adverse currency effect of 2.8 billion. Operating income per dollar fell from 4.513% to 3.913%, and operating income fell 398. The PhonePe charge of 700 explains more than the whole decline: with it added back, operating income would have been 5,803, up 5.49%, at a margin of 4.449%. The gross profit rate still fell 49 basis points, which the company attributes to "channel and format mix shifts" and investment in price and delivery. By market, China added 4,648, a rise of 23.27%. Mexico and Central America, the segment's largest market, added 522, or 1.00% in U.S. dollars; the document does not give the currency effect by market. eCommerce reached 27.45% of segment net sales. The document does not give operating income by country, so it cannot say whether the growth in China and eCommerce carries a lower margin than the business it is replacing.
Sam's Club U.S. grew net sales 3.08%, or 5.0% excluding fuel, whose sales fell 10.73% with lower prices. Membership and other income rose 8.70%. Fuel earned 620 of operating income on 9,271 of fuel sales, by the difference between the company's figures with and without fuel. Excluding fuel, operating income was 1,822, less than the 2,525 of membership and other income; if all of that income sits in the figure excluding fuel, which the document does not state, the merchandise outside fuel ran below break-even before fees. Corporate and support lost 2,878, which is 439 more than a year earlier. The 10-K does not explain the increase; corporate depreciation rose from 1,458 to 1,727.
Growth was organic except for VIZIO, acquired in December 2024 and therefore in fiscal 2026 for a full year rather than part of one. Its revenue contribution is not disclosed, so organic growth cannot be isolated. Scalability, read line by line, was mixed this year. Revenues grew 4.73% and cost of sales 4.62%, so the merchandise margin scaled. Operating expenses grew 5.76% and depreciation 9.48%, so the cost of serving customers did not. Share-based compensation grew 30.12%, or 4.84% without PhonePe.
The year added sales almost entirely through digital orders. Walmart U.S. turned them into slightly faster growth in operating income, while the consolidated figure lost its leverage in International, through the PhonePe charge, and in Corporate and support, whose loss grew 439 without explanation.
Is the profit cash, and does it belong to the company?
Operating cash flow was 41,565, up 5,122. Net income contributed 2,113 of the increase and depreciation 1,230. Two lines that do not repeat on their own contributed more than both together. Deferred taxes swung from −635 to +2,277, a change of 2,912. Accrued liabilities swung from +379 to +1,607. Investment gains, which are in net income but not in cash, took away 2,894 relative to the prior year. Working capital as a whole released 752, against 181 a year earlier. Inventories absorbed 1,443, about half the previous year's 2,755, while payables supplied 1,611 against 3,228.
The deferred tax swing alone, 2,912, is larger than the entire increase in free cash flow of 2,263. The 10-K gives the cause: the July 2025 tax law introduced 100% bonus depreciation, which "decreased cash taxes paid in fiscal 2026 and may change the timing of cash tax payments in future periods". The deferred tax liability on property and equipment rose from 4,303 to 6,122. This is a deferral, not a saving.
Three questions measure how much of the cash belongs to someone else or to another year. The first is the money of third parties held temporarily. Walmart pays its suppliers later than it sells their goods: payables were 107.15% of inventories at year end, up from 103.95%, and the cash conversion cycle was 2.8 days. Of payables, 5,989 are invoices confirmed to banks under supplier finance programs, which the company generally classifies as payables and as operating cash flow. In the year, payables and accrued liabilities together supplied 3,218 of cash, 21.6% of free cash flow. Deferred gift card revenue (2,941) and deferred membership fees (inside "other" accruals, not quantified) are also customers' money. None of this is a problem while sales grow; it means part of operating cash flow comes from growth in what Walmart owes.
The second question is the gap between taxes paid and taxes booked. The provision was 7,199, of which 4,922 was current. Cash taxes paid were 5,364, or 18.20% of pre-tax income against 22.36% a year earlier. Bonus depreciation explains the direction: federal current tax fell from 3,478 to 2,128 while federal deferred tax went from −214 to +2,010. The document does not quantify how much of the deferral reverses in fiscal 2027, and it adds that the global minimum tax could affect cash taxes as well.
The third question is whether capital expenditure captures all the investment. In fiscal 2026 the company also obtained 3,006 of assets through new leases, 703 of them finance leases. Unrecorded purchase obligations, which include "commitments to make capital expenditures", rose 11.3% to 41.4 billion; the document does not separate the capital portion. Capitalized software and other capitalized costs are not disclosed.
The accounting choices that move profit are few and visible. Revenue is recognized at sale or delivery, membership fees over the membership term. Inventory is valued mainly at LIFO in both U.S. segments, but the LIFO reserve is not disclosed. The company publishes no adjusted earnings per share in the 10-K; its non-GAAP measures are ROI and free cash flow. The effective tax rate of 24.4% exceeds the statutory 21.0% mainly because of state taxes (2.6 points) and non-U.S. items; the PhonePe charge, the company says, "provided no tax benefit". Two large offsetting items in Luxembourg, a valuation allowance release of 1,811 and an internal reorganization cost of 1,814, cancel each other in the reconciliation.
The early-deterioration comparisons, fiscal 2026 against fiscal 2025, give one flag. Inventories grew 4.28% against revenues at 4.73%, a gap of −0.44 points. Receivables grew 12.00% against revenues at 4.73%, a gap of 7.27 points, the only one above 5 points. The same gap was 8.33 points in fiscal 2025, so the drift is two years old. The notes attribute receivables mainly to pharmacy insurers, advertisers, banks for card transactions, suppliers, governments and real estate transactions; receivables from customers rose from 4.4 billion to 4.9 billion. The allowance for credit losses is not disclosed, so a loosening of terms cannot be excluded. Payables grew 7.49% against cost of sales at 4.62%, a gap of 2.87 points. Capitalized costs against the corresponding expense are not calculable. Revenues grew 4.73% against operating cash flow at 14.05%, so cash ran ahead of sales.
A classification choice also touches the cash line itself. Card and electronic transfers that settle within seven days are counted as cash, not as receivables, and they rose from 2.3 billion to 4.4 billion. Year-end cash rose 1,690. The whole increase in reported cash is therefore matched by card settlements in transit at the balance sheet date.
Owner earnings, defined as net income plus non-cash items minus capital expenditure minus working capital absorbed, were 10,844 including working capital and 10,092 excluding it. The report uses the first. Share-based compensation stays inside net income as a cost. Owner earnings are lower than free cash flow by exactly 4,079, the "other operating activities" line, which the 10-K does not break down and which is not added back.
More than a third of the growth in free cash flow is explained by deferred taxes and accrued liabilities, and that goes among the weaknesses in section 11. The profit is cash and belongs to the company, but fiscal 2026 cash flow is flattered by a tax deferral and by later payments, and owner earnings of 10,844 are a fairer measure of the year than free cash flow of 14,923.
What stands in front of the shareholder, and what is it worth?
Total assets were 284,668. On the asset side, four items exceed 5% of that total: property and equipment, inventories, goodwill and operating lease right-of-use assets. On the other side, four do as well: accounts payable, long-term debt, accrued liabilities, and deferred taxes and other. Their shares are in the data tables. Inventories and payables were discussed in section 4. The complete statement, every line and every year with its source, is in Financials → Balance sheet on this company's page.
Property and equipment is carried at cost, 256,421 gross, with no change in useful lives disclosed. Construction in progress, capacity paid for but not yet in service, rose 21.59% to 18,728. Goodwill of 28,735 is 82.2% Walmart International (23,622), with Walmart U.S. at 4,792 after the VIZIO acquisition. The company tests it qualitatively first and states that the fair value of every reporting unit is "significantly greater" than its carrying amount, without giving the headroom. Indefinite-lived intangibles, mainly trade names, add 4.3 billion; definite-lived intangibles are not disclosed. Deferred tax assets of 14,539 carry a valuation allowance of 4,421, mostly against loss carryforwards; net, the company has a deferred tax liability of 7,358.
Of accrued liabilities of 31,187, wages and benefits are 7,878 and self-insurance 5,525. The largest single piece, "other" at 10,733, includes deferred membership revenue, interest and supply chain costs but is not further split. Of cash of 10,727, about 3.9 billion may not be freely transferable to the U.S.; net debt is calculated on the remaining 6,827.
Gross financial debt was 44,762: commercial paper and lines 6,596, long-term debt due within a year 3,542, long-term debt 34,624. It rose 5,695 in the year. Leases are kept outside that figure and shown separately: operating lease obligations 15,572 and finance lease obligations 6,761. Net debt was 37,935 excluding leases and 60,268 including all of them. Long-term debt matures in steps, 3,542 in fiscal 2027 and 23,255 after fiscal 2031, at a weighted rate of 4.1%. The most restrictive covenant disclosed limits secured debt; undrawn committed lines total 15,000, and the 364-day line of 10,000 matures in April 2026. Off-balance-sheet obligations are 1.7 billion of issued letters of credit and 41.4 billion of purchase obligations; divestiture indemnities carry maximum potential payments of 3.4 billion, of which 0.7 billion is recorded.
Working capital is negative and has become more so: −22,595 at year end against −15,538 two years earlier, a current ratio of 0.79. In days, inventory turned in 40.1 days, payables were settled in 43.0 days and receivables collected in 5.7 days. Equity attributable to Walmart was 99,617; noncontrolling interests 6,270, plus a redeemable interest of 293 whose holder can put it at fair value from December 2027.
Return on average Walmart equity was 22.97%. Walmart retires the shares it buys back, so there is no treasury stock to add; adding back the 15,348 of repurchase cost recorded in equity in the three years presented lowers the year-end return from 21.98% to 19.04%. That cost differs by 13 from the cash paid used in sections 6 and 8, 15,361; the cash figure is stated on a settlement-date basis and the document does not explain the gap. Retained earnings rose 6,461, to 104,774, after dividends of 7,507 and repurchases charged to retained earnings of 7,619. A company that distributes more would show them flat without being worse, so they say little alone.
Financial strength is high on the company's own numbers. Interest on debt and finance leases took 9.38% of operating income. Long-term debt equals 1.74 years of current net income to Walmart.
Only 5.35% of assets is valued on an observable price: cash and the Level 1 and Level 2 investments. Goodwill and trade names, 11.60%, rest on management's impairment judgment; inventories and property, 68.48%, sit at cost.
What would be left for the shareholder is described by tangible equity of 66,582, or US$8.36 per share, cash of US$1.35 per share and cash net of gross debt of −US$4.27 per share. If revenues stopped growing and the operating margin returned to its three-year average of 4.26%, close to this year's 4.22%, working capital would not protect the shareholder: it is negative because suppliers fund inventory, and a business that stopped growing would see that funding shrink rather than turn into cash. The protection would come from the operating income of an asset base that is mostly owned: Walmart owns 3,728 of its 4,611 U.S. stores.
Does the capital earn a return, and does the shareholder receive it?
Per diluted share, revenues were US$88.90, up 5.50%; free cash flow US$1.860, up 18.74%; Walmart equity US$12.42, up 10.26%. Diluted EPS went from US$1.91 to US$2.41 to US$2.73. The diluted share count fell 0.73%, so each share captured slightly more than the growth of the whole. With three income statements and three balance sheets, these are two-year series, not trends.
Return on invested capital, which the company does not publish in this form, is defined here as operating income after tax at each year's effective rate, divided by average invested capital: total equity plus debt plus all lease obligations, minus cash. It answers whether the capital program earns more than the business it adds to. Its limit is that it charges the full tax rate to operating income and treats leases as capital. On that basis the return was 14.48% in fiscal 2026 and 15.46% in fiscal 2025. The company's ROI, built differently, moved from 15.5% to 15.1%, in the same direction.
The incremental return is where the case sits. Between fiscal 2025 and fiscal 2026 invested capital grew 13,779 and after-tax operating income grew 54: an incremental return of 0.39% on one year. Between fiscal 2024 and fiscal 2025 it had been 35.1%; over the two years combined it is 11.81%. The single year is depressed by the PhonePe charge and the claims increase, which together approach 1.6 billion before tax. It also measures delay as much as quality: construction in progress, shown in section 5, earns nothing yet, and the document gives no dates for when projects enter service. With the two named charges added back, after-tax operating income would have risen 1,263 and the one-year incremental return would be 9.17%; that is arithmetic, not a normalization, since claims costs recur. A low incremental return in a year of heavy building is consistent with both a slow program and a poor one, and the document does not allow the two to be separated.
Net investment, capital expenditure less depreciation plus acquisitions less working capital released, was 11,740, or 52.09% of after-tax operating income. At a return of 14.48%, that reinvestment implies operating income growth of about 7.5%. Realized growth was 1.63%. In fiscal 2025 the same arithmetic implied 8.61% and the company delivered 8.65%. Adding back the two named charges brings realized growth to 7.08%, close to the implied figure: on this arithmetic the fiscal 2026 gap is explained mostly by the charges, and capital that has not yet produced explains at most the remainder. Return and distribution belong together here. Walmart earns about 14% on its capital and keeps about half of its after-tax operating income in the business, so the return compounds; but in fiscal 2026 dividends and repurchases took 71.23% of net income to Walmart, and the reinvestment was partly financed with debt.
Self-financing over the three years presented was nearly complete. Free cash flow totaled 42,703; dividends and repurchases 35,696, or 83.59% of it. Net debt raised was 4,887 over three years, almost all in fiscal 2026 (4,881), and the parent issued no shares for cash. In fiscal 2026 alone, dividends and repurchases were 104.50% of free cash flow. The company did not depend on the market across the period, but in the last year it borrowed to return more than it generated.
Capital intensity is rising. Capital expenditure went from 1.738 times depreciation in fiscal 2024 to 1.876 in fiscal 2026. Cumulative capital expenditure of 71,031 was 1.25 times cumulative net income to Walmart.
The step-up is concentrated in one segment. Walmart U.S. spent 20,157, 2.15 times its depreciation of 9,390, against 1.93 times a year earlier; International spent 1.39 times and Sam's Club 1.17 times. Walmart U.S. total assets grew 10.41% while its operating income grew 5.34%. The segment's operating income on average assets, before tax, fell from 16.60% to 15.94%. The extra operating income of 1,276 came on 15,621 of extra assets, about 8.2% before tax. The capital is going where the margin is highest, but the first year of the larger program earned less than the existing base. The document does not split maintenance from expansion, except that new stores and clubs took only 1,406 of 23,445 in the U.S. Using depreciation as a stand-in for maintenance, a Walmart that stopped growing would need about 14,203 a year to stand still and would release roughly the other 12,439. The growth spending is mostly in the capex line: supply chain, customer-facing initiatives, technology and other took 16,468 in the U.S., and advertising, at 5.4 billion, is 0.76% of net sales. Calling Walmart capital-light would be wrong.
At the closing price of US$119.14 on the last trading day of fiscal 2026 and 7,972,402,501 shares (both provided with the request; the share count is dated March 11, 2026), market capitalization was 949,832 and enterprise value, excluding operating leases whose cost is already in operating income, 997,191. The price is matched to the fiscal year end so that price and results describe the same moment. A buyer of the whole company would earn 2.99% of the price in pre-tax operating income, before financing. The shareholder pays 43.6 times diluted EPS, 63.6 times free cash flow and 22.6 times EBITDA, and receives a dividend yield of 0.79%. On owner earnings of 10,844 the yield is 1.14%.
Capital earned about 14% and the shareholder received most of what was generated. After tax, a buyer of the whole company would earn 2.26% on the enterprise value, against 14.48% that the business earns on its invested capital; the difference is what the buyer pays for the investment program to deliver.
Which notes change the reading, and by how much?
The auditor, Ernst & Young, names one Critical Audit Matter: contingencies. The legal notes describe opioid cases with no accrual, for which the company says it "cannot reasonably estimate any loss or range of loss": about 230 cases in the federal multidistrict litigation, a Florida hospital trial that ended in a mistrial in December 2025 with a retrial from August 27, 2026, and a Department of Justice civil case set for trial in November 2027. They add Asda equal value claims by about 73,000 claimants, India foreign-investment and antitrust proceedings, and a U.S. money-transfer investigation. The largest amount quantified in the year is the driver platform settlement: a 100 million judgment, 37 million accrued. The discretion lies in the decision not to accrue. The figure the reader has is 3.3 billion, what the settled opioid claims cost in fiscal 2023. A verdict, a settlement or a ruling in the third Asda phase from November 23, 2026 would turn an unrecorded matter into a charge; the note gives no range. The fiscal 2025 legal note contained two opioid securities class actions, a Federal Trade Commission money-transfer suit and a consumer-protection suit on the driver platform; the fiscal 2026 note no longer mentions them and does not say how they ended, although the MD&A still refers to "Opioids-Related Securities Class Actions".
Self-insurance reserves are 5,525, up 11.03% from 4,976. They cover general liability, workers' compensation, auto and product liability and employee healthcare, are estimated with actuarial methods and carried undiscounted. The reserve rose 549 while the related expense rose about 900, which the company attributes to "rising costs to resolve claims across retail and related industries". The document gives no sensitivity. If claim costs keep rising, the reserve and the expense rise together, and this is one of the three costs that absorbed the year's operating leverage.
Share-based compensation at subsidiaries carries about 3 billion of unrecognized cost, based on grant-date fair value, tied to conditions "including vesting upon an initial public offering". The fiscal 2026 modification at PhonePe, made "in contemplation of a potential initial public offering", cost 700 and cut Walmart's stake from about 84% to 73%. If PhonePe lists, an unknown part of that 3 billion would be charged in that period, and Walmart's share of PhonePe would move again.
The tax note holds a fourth judgment. Valuation allowances on deferred tax assets fell from 7,405 to 4,421, mostly with a release of 1,811 in Luxembourg that an internal reorganization charge of 1,814 offset almost exactly. Gross unrecognized tax benefits fell by 1,317, to 2,440, mainly through decreases for prior-year positions. Both rest on management's view of what tax authorities will accept and of future taxable income, and the company names "forecasted operating earnings" among its sources. U.S. federal returns remain open from fiscal 2018, international returns from fiscal 2015, so a settlement in either direction would move the rate.
No defined benefit pension plans are reported. Taken together, the notes shift the reading in one direction: fiscal 2026 profit excludes contingent costs that the document declines to estimate, and it rests partly on tax and claims estimates that management sets.
What did management do with the money, and do they say so when it goes badly?
Control is concentrated. Walton Enterprises, LLC holds voting power over 3,516,197,849 shares, 44.11% of the class at April 10, 2026, including the 6.44% held by the Walton Family Holdings Trust (Proxy 2026). Two Walton family members sit on the Board. Directors, nominees and executive officers as a group own 7,044,961 shares, under 0.1%, and none has a pledge. The proxy reports award vesting (588,434 shares for Doug McMillon in fiscal 2026) but not open-market purchases, so whether the holdings were bought or received cannot be established. Ernst & Young has audited Walmart since 1969. Its audit fees rose 23.2% to 44.7 million, attributed to work on "financial systems and functions modernization". Related-person transactions include purchases of 48.1 million from a supplier where a director's sister is an officer, and the sale of former head-office parcels for 19.9 million to an entity owned by director Steuart Walton and his brother, at appraised values.
Capital went mainly into the business. Over three years capital expenditure took 71,031, against 35,696 returned to shareholders. Minority stakes, mainly in Flipkart, were bought for 3,462 in fiscal 2024, and acquisitions took 1,958, mostly VIZIO. VIZIO left 1,375 of goodwill and no impairment has followed; its results are not disclosed separately. Investments were sold for 5,007, including JD.com.
Repurchases rose 80%. Walmart bought 85.0 million shares for 8,088, an average of US$95.13 (8,088 / 85.0). That average is 20.2% below the year-end close. The multiple paid has risen, however: 27.3 times free cash flow per share in fiscal 2024, then 51.1 times in fiscal 2026. The company says the increase came from "opportunistic prices during the first quarter"; fourth-quarter purchases averaged US$111.59. A new 30 billion authorization replaced the old one in February 2026.
Dilution is covered. The "other" line of the equity statement added 30 million shares, which the document does not label, while 85 million were repurchased, so the count fell by 55 million. The repurchase returned capital rather than plugging dilution.
The 10-K publishes no adjusted earnings, so the exclusions sit in the proxy. For incentive purposes, fiscal 2026 operating income was raised by 1,495 to 31,320, 5.01% above the reported figure, mainly by excluding currency, legal settlements, unplanned restructuring and the PhonePe charge. The proxy attached covers one year, so the cumulative figure across years is not available.
Inside the filing, internal control is effective and there are no restatements or auditor change; the proxy adds that no director or officer has pledged shares.
Read together, the decisions of the year point one way. Walmart raised capital expenditure above the 21-25 billion it had projected, borrowed net, raised repurchases at a higher multiple, prepared PhonePe for a possible listing, moved its listing to Nasdaq and changed its CEO. The balance sheet that results carries more gross debt (section 5), 3,325 more construction in progress and a share count 0.69% lower. The company spent more on both building and buying back stock in the same year, and financed the difference with debt.
Executive pay rests on constant-currency sales and operating income for the annual bonus, and on sales and adjusted ROI for performance shares, all "excluding certain items" (Proxy 2026). These are the same exclusions as above: the PhonePe charge and legal costs that reduced reported operating income do not reduce incentive operating income. Incentive ROI was 15.7% against a reported 15.1%, exactly on target; the annual bonus paid 112% of target for Doug McMillon and the CFO. The company's peer group is 24 U.S. companies with revenue or market value above 100 billion.
The candor test finds explanations but no admissions. The 10-K says ROI "decreased", that operating expenses rose on claims and PhonePe, and that tariffs affected fiscal 2026, without quantifying the tariff cost. It mentions "certain legal matters and other business restructuring charges" without amounts. No project is described as closed or failed, and capital spending above the projected range is not commented on. The absence is an observation, not an accusation.
What would have to happen for capital to be permanently lost here?
Two of the eight have already happened in fiscal 2026, tariffs and claims costs; the rest are potential, and none carries a range of loss in the document.
The risk factors changed in ways that matter. Tariffs moved from possible to experienced. "Emerging agentic platforms" and AI-enabled cyberattacks are new. A paragraph on self-insurance funding is new, as are antitrust class actions over retail prices and supplier costs, naming batteries and soft drinks. The Pillar Two minimum tax is now described as affecting cash taxes. The fiscal 2025 sentence on boycotts linked to diversity and ESG positions is gone, as is the long climate-risk passage.
Three years from now this investment has produced a permanent loss. The first way it happened: the capital program did not pay. The figure that measures it today is the incremental return of 0.39% and construction in progress of 18,728; the signal is the company's ROI and the gap between operating income growth and net sales growth. The second: the margin was given away. Operating margin is 4.22%; the signal is the Walmart U.S. gross profit rate, now 27.458%, falling while the operating expense rate keeps rising. The third: the multiple compressed while the business stayed sound. The figure is a price of 43.6 times earnings, paid for pre-tax earnings that grew 1.07% before investment marks. The signal is that gap persisting.
What did the company promise, and what came of it?
Six catalysts are named by the document itself. The fiscal 2027 capital plan of 25-27 billion fixes how much more capital the program will absorb. The dividend, raised to US$0.99, and the new 30 billion repurchase authorization fix the claims on cash, alongside short-term borrowings that peaked at 10,241 at a month end during the year. A PhonePe listing could trigger part of the about 3 billion of unrecognized compensation cost at subsidiaries and change Walmart's stake. The Florida opioid retrial from August 27, 2026 and the Asda third phase from November 23, 2026 could turn unaccrued matters into charges. The redeemable minority holder in a Walmart U.S. subsidiary can put its shares at fair value from December 2027. None of them controls the operating margin, which is where the case is decided.
The fiscal 2025 10-K made a small number of checkable statements about fiscal 2026, and the results are mixed.
| Declared in the fiscal 2025 10-K | Realized in fiscal 2026 | Gap |
|---|---|---|
| Capital expenditure of approximately 21-25 billion | 26,642 | above the top of the range by 1.6 billion |
| Annual dividend of US$0.94 | US$0.94 declared | none |
| Repurchases funded mainly by free cash flow | 8,088 against free cash flow of 14,923; after dividends, 7,416 remained | covered by FCF, not by FCF after dividends |
| Operating income growing faster than net sales | 1.63% against 4.73% | not met |
| About 1.7 billion of interest on long-term debt | debt interest of 2,318 including short-term borrowings | not separable |
The capital plan was exceeded without comment, the dividend was delivered, and the operating leverage objective repeated in both filings was missed. This is the first coverage of Walmart, so the comparison is with the company's own prior filing rather than with an earlier report.
The three questions of section 2 can now be answered with the figures shown.
The consolidated margin did not move as the company says it should: operating income grew 1.63% on net sales up 4.73%. The cause is narrow and named: claims costs, the PhonePe charge and depreciation. Without them, operating expenses grew more slowly than sales, and Walmart U.S., which carries the claims and most of the depreciation, still grew operating income faster than sales. The miss sits in International and in Corporate and support. The reading holds as long as depreciation and claims grow more slowly than gross profit; it fails if the Walmart U.S. operating expense rate keeps rising faster than the gross profit rate, and the segment table in next year's Note 11 will show which.
The capital program has not yet shown a return, and the document cannot say whether it will. The incremental return on one year was 0.39%, against 35.1% the year before, and 9.17% with the two named charges added back. A large part of the capital is construction in progress, and nothing in the filing says when it will earn; at Walmart U.S. the extra assets earned about half the return of the existing base. The reading holds if the company's ROI stops falling with capital expenditure at 25-27 billion; it fails if invested capital keeps growing faster than after-tax operating income for another year.
Fiscal 2026 cash flow is higher than the business's run rate. Deferred taxes explain more than the whole rise in free cash flow, and owner earnings of 10,844 are a fairer base than free cash flow of 14,923. The reading holds while bonus depreciation keeps cash taxes low; the deferred tax line of the next cash flow statement will show when it reverses.
At the price provided, a buyer pays 43.6 times earnings. The operating income behind those earnings grew 1.63%, and pre-tax income before investment marks grew 1.07%.
Each strength below is a figure already shown in the body.
The weaknesses come from the same sections, and three of them bear on the same question, the return on the capital program.
The document is silent on five points that would change the reading.
Walmart in fiscal 2026 is a sound business in the middle of a heavy investment cycle, whose results this year show the cost of the cycle more than its return. At the price provided, that return is already part of what the buyer pays for.
What next year's filing will settle
Walmart U.S. operating expense rate, 22.792% today. Its movement against the gross profit rate (27.458%) will answer whether the margin moves as the company says (question 1).
Return on investment as reported by the company, 15.1% today. Its direction with capital expenditure at 25-27 billion will answer whether the program earns (question 2).
Construction in progress, 18,728 today. Whether it falls as projects enter service will show how much of the low incremental return is delay (question 2).
Deferred income taxes in the cash flow statement, +2,277 today. Its sign and size will show how much of fiscal 2026 cash flow repeats (question 3).
Self-insurance accrual, 5,525 today. Its growth against net sales will show whether claims costs keep absorbing the operating leverage (question 1).
Based on Walmart Inc.'s Form 10-K for the fiscal year ended January 31, 2026, filed March 13, 2026, with the Form 10-K for fiscal 2025 for comparison and the 2026 Proxy Statement for ownership, governance and compensation. Market data provided with the request: closing price US$119.14 on the last trading day of fiscal 2026 (January 30, 2026, per the proxy; dated January 31, 2026 in the request) and 7,972,402,501 shares outstanding at March 11, 2026. This report is for analysis purposes only and does not constitute investment advice.
The full data table behind this report — every line item with its source in the filing and the arithmetic checks — is published separately: Walmart Inc. FY2026 data table.