Weekly Radar – Week 8

1. WALMART
2. AIRBUS

US EQUITIES

Walmart: Every day low price

• With $713 billion in revenue in 2025, reported on February 19, 2026, Walmart’s revenue has just been surpassed by Amazon, which has become the company with the highest revenue in the United States. However, on the stock market, Walmart has posted a total return in $ of x2.9 compared to +26% for Amazon over the last five years. Although Walmart’s financial reports were met with a lukewarm reception by investors, Walmart’s stock market outperformance of Amazon has continued since the beginning of the year: +12% vs. -11%.
• With strong stock market performance, Walmart is also a heavyweight in the US economy: 9% of US retail trade, 20% market share in US food retail, twice as big as Kroger, its main competitor in this segment. Walmart is best known today for its 3,566 Supercenters at the end of January 2026 and its unbeatable prices. Ninety percent of American households live within 10 miles of a Walmart. The average Supercenter is 16,500 square meters in size and sells food, a wide range of consumer goods, pharmacy products, and optical services. Walmart’s first Supercenter dates back only to 1988, whereas Walmart had mainly operated discount stores since 1962. After 10 years of negative FCF to develop the Supercenters, Walmart generated $3 billion in 1997.
• The mid-2010s marked the beginning of a new era for Walmart: its transformation into a leader in e-commerce in the United States. 
• Starting in 2015, Walmart focused its investments on e-commerce and logistics. These investments rose from $2.5 billion to $5 billion in 2019. In 2018, Walmart halted the expansion of its store network in the US: in 2014, $5 billion was invested, compared to just $313 million in 2019. Walmart also made strategic acquisitions in the sector: Flipkart in 2018 and Jet.com in 2016. Starting in 2022, Walmart have accelerated its investments in e-commerce, which will increase from $5.6 billion in 2021 to $14.6 billion in 2025.
• Today, Walmart generates more than $150 billion in e-commerce revenue, accounting for nearly a quarter of its total revenue. Walmart still lags far behind Amazon, whose platform has a gross merchandise value of $800 billion. In the United States, Walmart’s market share in e-commerce share is just over 10%, compared to nearly 40% for Amazon in 2024.
• However, in 2024, investors perceive from management comments that e-commerce is on the verge of becoming profitable, which becomes the case during the four quarters of 2025, with growth continuing to outpace that of Amazon. In 2025, Amazon’s e-commerce revenue in the United States grew by 10%, compared to 24% for Walmart.
• Investors are welcoming the success of this transformation since mid-May 2024, when Walmart became more highly valued than the 100 largest stocks on the Nasdaq. In mid-May 2024, Walmart was trading at 25 times its earnings. Today, Walmart is trading at 42 times its earnings, compared to 25 times for the Nasdaq100.
• In our view, while management expects operating income growth of only 6-8% by 2026, Walmart has the potential to grow faster its earnings and Free cash flow for several years for at least three reasons. The most important is that e-commerce is shifting from being a detractor to profit growth to a powerful contributor. If we were to apply Amazon E-commerce North America’s operating margin of 6% to Walmart’s e-commerce revenue, this would result in operating income of $9 billion, compared to $31 billion for Walmart as a whole in 2026. Second, Walmart is demonstrating that its new business model is solid and lucrative. Retail companies such as Costco, TJX, and Casey’s, with well-established business models, are trading at earnings valuation multiples of over 30x. Finally, Walmart’s private label offerings are attracting Americans whose purchasing power is under pressure, and could be further developed. These brands together are worth at least $40 billion, compared to $68 billion in 2023 for Kirkland, Costco’s brand.

EUROPEAN EQUITIES

Airbus falls after disappointing 2026 forecasts

•   In 2025, Airbus had finally have managed to slightly exceed its latest commercial delivery target, with 793 aircrafts delivered compared to the 790 targeted after the quality issues reported last December. Q4 revenue was 2% below market expectations due to weaker performance in the Commercialdivision (-2%/consensus), which accounts for more than 70% of the group’s Q4 sales, and in Defense & Space (-3%/consensus), but higher in Helicopters (+3%/consensus). Nevertheless, operating income, generating a margin of 11.5% (consensus at 10.8%), was a positive surprise in all divisions, particularly in Defense & Space. However, these solid results are overshadowed by the 2026 forecast.
• For 2026, the group is targeting 870 aircrafts deliveries, which is below the consensus estimate of closer to 900. In addition, the expected operating profit (€7.5 billion) and free cash flow (€4.5 billion) are well below expectations, at €8.3 billion and €5.9 billion respectively! This nearly stable expected FCF (it was €4.6 billion in 2025) is disappointing given that deliveries are expected to increase by close to 10% compared to last year. It certainly reflects higher-than-expected investments in Spirit AeroSystems (whose activities it took over at the end of 2025) and perhaps also the impact of inspections related to A320 fuselage non-conformities.
• Looking at delivery forecasts, the main discrepancy stems from the downward revision of A320 production rates: 70 to 75 deliveries per month are now expected in 2027, compared with a previous target of 75, which is now only expected to be achieved in 2028. However, this comes as no surprise to the market, as Pratt & Whitney (RTX), one of the two engine manufacturers for the single-aisle aircraft with its GFT, had already warnedthat it was experiencing major delivery problems for technical, industrial, and logistical reasons. While production rates remain unchanged for long-haul programs,  the A350 (12/month in 2028) and the A330 (5/month in 2029), they had also been modified for the A220 to only 13/month in 2028, given the integration of Spirit AeroSystems’ assets.
   
• The supply chain issues that the group has been experiencing for several quarters now seem to be limited to GFT engines, with the aircraft manufacturer’s other suppliers gradually returning to normal delivery rates. It is important to note that the adjustment in delivery rates is not due to weak demand. It is possible that management is deliberately taking a conservative approach after several years of disappointing results, especially since it has no control over the difficulties faced by Pratt & Whitney.
   
• One of the expected repercussions of these supply chain bottlenecks is the continuation of capacity discipline imposed on the aviation sector, which will support airline ticket prices and, above all, increase maintenance costs(MRO) as older aircraft will have to fly longer. This is therefore very positive for players such as Germany’s MTU Aero Engines, largely exposed to MRO, and of course for Safran, whose CFM56 engine (which has been replaced by the LEAP in the A320neo), the world’s best-selling civil aviation engine (still more than 22,000 in service) will require more maintenance, which is a highly profitable business for Safran.
   
• With this guidance, Airbus, backed by a very solid order book, hopes to reduce the risk of future disappointment regarding the ramp-up of its single-aisle aircraft and prove that it is able to maintain its margin discipline. Year to date, even before this announcement, Airbus had already significantly underperformed engine manufacturers (more than 14% difference in stock market performance compared to Safran, for example), indicating that investors were expecting a forecast lower than the consensus. Among aircraft manufacturers, since deliveries of Pratt & Whitney engines will limit aircraft production in the coming months, Boeing may benefit from a clearer recovery trajectory in the short term. In any case, the next actual delivery data from Airbus will allow us to judge whether the 2026 outlook is indeed conservative, which the strength of the 2025 results would lead us to believe.