Walmart's E-Commerce Surge and Valuation Concerns Ahead of Q2 Earnings

Walmart (WMT) has been adapting to changing times by investing in its global e-commerce business, which saw revenue surge 26% year over year in the last quarter. The company's membership fees grew 17%, a strategy similar to Costco Wholesale's lucrative membership model.

The retail giant has also proven resilient in economic downturns and less volatile than the overall market. As such, it's a solid blue-chip stock for portfolios, with a dividend that yields 0.9% and has grown by about 6% on average over the past five years.

However, there's a reason to exercise caution: Walmart's shares seem overvalued as of early August, with a price-to-sales ratio of 1.24, well above its five-year average of 0.83, and a forward-looking P/E ratio of 38, also above its five-year average.

The company is scheduled to report its second-quarter results on Aug. 20, which could impact share prices. It's worth considering whether to buy before then, but it's essential to weigh the potential benefits against the current valuation.