Walmart Stock Deeply Overvalued According to DCF Analysis
On October 5, 2026, Walmart Inc. (WMT) faced scrutiny over its valuation through a discounted cash flow (DCF) analysis. Despite a modest 3.4% gain over the past year, the stock has dropped 5.8% year-to-date. The DCF earnings-based model suggests WMT is significantly overvalued, with an intrinsic value of $33.28 compared to its current price of $104.26. This results in a margin of safety of -213.3%, indicating a substantial overvaluation. The model assumes a 10-year growth rate of 6.4% in earnings per share (EPS), followed by a terminal growth rate of 4%, and applies a discount rate of 12%.
The DCF model based on free cash flow (FCF) further supports the overvaluation claim, with an intrinsic value of $18.09 and a margin of safety of -476.3%. However, Walmart's GF Value™, a proprietary valuation measure, stands at $104.27, suggesting the stock is fairly valued. This discrepancy highlights the challenges in valuing WMT, especially given its low predictability rank of 1 out of 5 stars, which raises concerns about the reliability of the DCF inputs.
Walmart's GF Score™ of 83 out of 100 indicates strong financial health, profitability, and growth, but its momentum rating is only 4 out of 10. The analysis also notes that 19 investment gurus currently hold the stock, with 6 adding and 13 trimming their positions. Insiders have sold $2.9478 billion worth of shares over the past year, a potential red flag for investors. The differing opinions between DCF models and GF Value™ underscore the need for caution when evaluating WMT's stock.