Walmart's stock price has reached a near historical high, but the CFO suggests that low-income consumers are cutting back on spending - what signal does this send?

Interestingly, Walmart's performance this year has outshined its peers. Target, RH, and Home Depot are all struggling, but Walmart has outperformed the S&P 500 for two consecutive years, with a three-year increase of over 200%. The reason is simple: under economic pressure, consumers are flocking to Walmart to save money, which is a typical case of "consumer shift"—people are not refraining from spending, they are just changing where they spend.

But here is the irony: Walmart itself has stated that spending by low-income consumers is declining, and the highest income gap in nearly a decade means that the lives of the middle and low-income groups are really difficult. Walmart benefits from this shift, capturing market share, but this is also a dangerous signal for the economy.

The irony is even more pronounced in the valuation. Walmart's historical median PE is 28.6, and it has now soared directly to 36.9—higher than Nvidia's forward PE. This is not a fast-growing company; the sales growth guidance is only 4.8%-5.1%. The dividend yield is just 0.9%, which is also not very attractive.

Conclusion: Walmart is indeed impressive, but the current prices are outrageous. If the economy really faces issues, it can withstand it, but this price buys an 'insurance premium', not value.