Walmart Inc
WMT · NYSERetail · Discount Stores / Grocery
Since the Report + 3.0%
Close on Report DayAug 20
$104.37▼ 8.7%Report-Day Move
- Market Cap(Today)
- ≈ $855 B
- 1Y Return(At Report)
- + 8%
- P/E($2.83 · Trailing 12M)
- 38.0
- PEG(company guidance 2027)
- 5.42
- Net Margin(Trailing 12M)
- 3.0%
Walmart topped expectations in Q2 with $187.9 billion in revenue, raised its full-year adjusted profit outlook, and beat the Street with adjusted earnings of $0.81 per share. Even so, the stock fell 8.7% close to close: U.S. comparable sales slowed to their weakest pace in roughly six years, and a large part of the profit jump came from one-time tariff refunds. The real question now is whether the company can protect its margins while plowing those refunds back into lower prices.
Revenue (Q2)
$187.9B
▲ 5.9% YoY
Adjusted EPS
$0.81
~8% Above Expectations
Operating Income
▲ 28.8%
Adjusted +17.4% Const. Currency
U.S. Comparable Sales
▲ 2.6%
Slowest Pace in ~6 Years
Global E-Commerce
▲ 23%
Advertising Revenue ▲ 38%
Stock Reaction
▼ 8.7%
Close to Close
Quarterly Revenue ($ Billion)
177
179
191
178
188
185–190
- Q2 26
- Q3 26
- Q4 26
- Q1 27
- Q2 27
- Q3 27E
- Annual Revenue Growth
- ▲ 5.9%Const. Currency 5.0%
- Global E-Commerce
- ▲ 23%Advertising Revenue ▲ 38%
- U.S. Comp Momentum
- ▼ 150 bpsFrom 4.1% to 2.6%
Q3 FY27 Company Guidance
- Full-Year Adjusted EPS2.80 – 2.87 $
Midpoint 2.835 · prior range 2.75–2.85 $Revised Up ▲
- Full-Year Net Sales4% – 5%
Constant currency · prior 3.5%–4.5%Revised Up ▲
- Q3 Adjusted EPS0.62 – 0.64 $
Market expectation ~0.68 $Below the Range ▼
- Adjusted Operating Income Growth7.0% – 8.5%
prior 6.0%–8.0%Revised Up ▲
The blue band is the company's low–high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. Axis is ±13% around the midpoint.
- Q3 EPS Midpoint
- ~$0.63Street Modeled ~$0.68
- Operating Income Growth
- ▲ 7–8.5%Revised Up
- Shares Outstanding
- ~7.96BBuybacks Ongoing
“Everyday Low Price is a philosophy that builds trust, and the bias is always to lower prices when possible.”
- Everyday Low Price philosophy
- Advertising and marketplace momentum
- Pressure on lower-income shoppers
Summary
Walmart reported $187.9 billion in revenue for the second quarter of its January fiscal year, up 5.9% year over year and 5.0% in constant currency, slightly ahead of market expectations. Adjusted earnings came in at $0.81 per share, up 19% year over year and about 8% above the ~$0.75 estimate. Operating income rose 28.8% as reported and 17.4% on an adjusted constant-currency basis. Global e-commerce grew 23%, global advertising 38%, marketplace sales 52%, and membership income 17%. The company raised both its full-year adjusted profit and sales outlook.
Strong as the numbers were, the stock fell 8.7% close to close to $104.37, touching an intraday low near $103.70. Investors had three objections. U.S. comparable sales excluding fuel rose just 2.6%, well below the prior quarter's 4.1% and the slowest pace in roughly six years. Second, much of the profit jump came from one-time tariff refunds; the net effect of the refunds and related price investment added about 7.5 points to operating income growth, making the beat look artificially strong. Third, the third-quarter adjusted EPS guide of $0.62–0.64 landed below the ~$0.68 the Street had modeled.
Our overall read is that the quarter was fundamentally solid: revenue and profit beat, the full-year outlook was raised, and high-margin businesses (advertising, marketplace, membership) delivered nearly half of operating income growth, a genuine structural strength. Against that, earnings quality and the comp slowdown are real caveats. We hold the score at 75 and the verdict at "buy" because the print is fundamentally good, but the tariff-refund profit is not durable and the softening consumer is a risk worth flagging. The weak stock reaction does not change the score; the score measures the quarter, not the stock.
Full Review
ClaudeRevenue beat, outlook raised.
Walmart's $187.9 billion in revenue grew 5.9% year over year and 5.0% in constant currency, edging past expectations. Adjusted EPS of $0.81 rose 19% year over year and beat the ~$0.75 estimate. The company lifted its full-year adjusted EPS outlook from $2.75–2.85 to $2.80–2.87 and its constant-currency net sales growth outlook from 3.5%–4.5% to 4.0%–5.0%. Raising guidance on the print signals management's confidence in the second half. Sam's Club U.S. comparable sales rose 4.4% excluding fuel, a relative bright spot. Taken together, the top line and full-year view are the encouraging side of the quarter.
Earnings quality sparked debate.
Operating income jumped 28.8% as reported, but taking that figure at face value would be misleading. The company booked roughly $2.9 billion of tariff refunds this period; the net effect of the refunds and related price investment added about 7.5 points to operating income growth. Adjusted constant-currency operating income growth of 17.4% is still healthy, yet much of the 96-basis-point gross margin improvement stems from a one-time item. Management said remaining refunds will be redirected into lower prices, meaning the margin benefit may be limited in coming quarters. This quality question was at the center of the sell-off.
U.S. comps at a six-year low pace.
Walmart U.S. comparable sales rose just 2.6% excluding fuel, well below the prior quarter's 4.1% and the slowest pace in roughly six years. A pharmacy deflation headwind of about 125 basis points weighed on the figure, but the slowdown runs beyond that. Management acknowledged that high fuel costs are putting incremental pressure on lower-income shoppers, who are making trade-offs on a tighter budget. The company said July price investments showed early signs of offsetting that pressure. Even so, the path of traffic and spending will be the most closely watched line in coming quarters.
High-margin businesses are the new engine.
The most structural positive was the momentum in high-margin businesses like advertising, marketplace, and membership. Global advertising grew 38% (Walmart Connect up 43%), marketplace sales 52%, and global membership income 17%. Management said these lines delivered nearly half of operating income growth. This means Walmart is building a more profitable layer of revenue on top of its classic retail margin, gradually lifting overall profitability. The 23% growth in e-commerce feeds the same story, since online scale is the vehicle for these high-margin businesses. The long-term thesis largely depends on this shift continuing.
Third-quarter guidance is cautious.
The company guided third-quarter adjusted EPS to $0.62–0.64, below the ~$0.68 the Street modeled. Management said plainly that instead of showcasing the tariff-refund gain, it chose to reinvest it into lower prices, which will cap near-term profit. While that is a sensible choice for long-term share, it disappointed investors focused on quarterly earnings. The tension between the raised full-year outlook and this cautious quarter view is the main theme ahead. In short, the company is managing the business toward future share, not today's profit.
Strengths
5- Revenue ($187.9B) and adjusted EPS ($0.81) beat expectations, and the full-year outlook was raised.
- Global e-commerce grew 23%, advertising 38%, marketplace 52%, and membership income 17%.
- High-margin revenue lines delivered nearly half of operating income growth.
- Sam's Club U.S. comparable sales rose 4.4% excluding fuel.
- 41 analysts' average target is $137.65, about 32% above the post-drop price.
Risks
5- U.S. comparable sales growth slowed to 2.6%, roughly the weakest pace in six years.
- Much of the profit jump came from a one-time ~$2.9B tariff refund.
- Q3 adjusted EPS guide ($0.62–0.64) is below market expectations (~$0.68).
- High fuel costs are pressuring lower-income shoppers.
- Valuation is rich: the stock trades around 37x trailing adjusted earnings.
What to Watch
3- Q3 FY27 earnings due ~Nov 2026; guidance midpoint about $0.63.
- Conversion of tariff refunds into price investment and its margin impact will be watched.
- Holiday-season (Q4) demand and competitive pricing will be tracked.
Upcoming Earnings
To Understand This