Walmart is suffering from success

At a glance, Walmart had a great Q4: It beat top and bottom line expectations, e-commerce sales jumped a staggering 20%, and it even boosted its dividend.

So why did the stock sink 6.53% today?

The largest brick and mortar retailer in the US has been on a meteoric rise over the past four years, but now investors fear it’s hit a peak. It’s not that Walmart’s business isn’t doing well: The company brought in revenue of $180.5 billion last quarter, so it’s not going anywhere anytime soon.

But it’s the retailer’s growth projections that disappointed eagle-eyed investors today. Walmart expects its full-year adjusted earnings to come in between $2.50 and $2.60 per share, which is below the $2.76 analysts expected. And it forecasts net sales will rise 3% to 4% for the full year, slightly below expectations of 4%.

Management also issued a warning about ongoing geopolitical question marks hanging over businesses.

“We don’t want to get ahead of ourselves. There is certainly some unpredictability in any environment that we have, but we feel really good about our ability to navigate that,” said CFO John Rainey on the firm’s earnings call. He also noted that tariffs could affect the brand, which produces two-thirds of its goods domestically.

Walmart is seen as a bellwether of American consumers in general and the retail industry in particular, which is why its decline today dragged down a bunch of other retailers like Target, Costco, Amazon, and Home Depot.

Has Walmart hit a wall?

Sure, Walmart may be your go-to place to stock up on essentials like these biker gnomes, but does the stock belong in your portfolio?

While the thought of slowing profit growth spooked investors, analysts largely think today’s knee-jerk reaction may be too harsh.

“The health of the business remains intact, in our view, with broad-based top line momentum continuing in Q4,” wrote Oppenheimer analyst Rupesh Parikh.

Global membership income from its Walmart+ subscription program and its Sams Club brand leaped 16% last year, while revenue from its e-commerce segment grew by 20% in the last quarter alone. Its pharmaceutical delivery service is off to a great start, too, rolling out in six states so far.

All in all, the chain where thousands of toddlers across America are having a meltdown at this very moment is seeing a lot of its efforts to expand beyond discount-loving consumers pay off.—LB