Walmart
WMT- Our rating
- selllow conviction
- 12-month target
- $130.70 +4.7%
- Expected vs. S&P 500
- -13 ptsSee the math
- Next earnings
- Nov 19In 14 daysListen to the call, 8:00 AM ET ↗
Over 40% of Walmart's latest profit growth came from one-time tariff refunds.
Walmart is the largest U.S. retailer, and investors value it like a technology company because advertising, memberships and online sales let profit grow faster than sales. Walmart U.S. makes about two-thirds of sales and most of the profit, while International and Sam's Club are smaller and grew faster last quarter. U.S. same-store sales growth just hit a six-year low, and last quarter's profit jump leaned on one-time refunds. The stock depends on the high-margin businesses carrying growth once those refunds are spent.
Walmart is the largest U.S. retailer, and groceries are about 60% of what Walmart U.S. sells. Low prices draw about 280 million shoppers a week, and that traffic supports higher-margin advertising and memberships.23,24
What it sells
- Walmart U.S.67% of revenue, Q2 FY2027
Stores and website across the country. Grocery is 59% of its sales, and it earned about 79% of segment operating profit last quarter.
- Walmart International19% of revenue, Q2 FY2027
Stores and online shops abroad. Mexico and Central America are about 41% of the segment, followed by China and Canada.
- Sam's Club14% of revenue, Q2 FY2027
A U.S. warehouse club that charges an annual fee and competes with Costco. Groceries are two-thirds of its sales.
Who buys it
Ordinary households, with no single customer that matters on its own. About 280 million people shop each week in more than 10,900 stores and online. Online orders were about 23% of Walmart U.S. sales last quarter, led by store pickup and delivery.
Where you've seen it
Great Value and Equate, Walmart's store brands, and Walmart+, the membership with unlimited delivery from local stores.
Under Doug McMillon, CEO from 2014 to January 2026, Walmart's online business turned a profit and advertising grew fast, helped by buying VIZIO. Profit grew slightly faster than sales, and by January 2026 the stock traded near 42 times expected earnings, almost double its valuation two years earlier. John Furner, who became CEO on February 1, 2026, said in August that tariff refunds would fund lower prices.
How the business makes money
Why Walmart's shoppers make its ads business so profitable1,2,5,6,7,8,10,14,16,20
- Step 1
Low prices draw about 280 million shoppers a week. Walmart ran more than 11,000 price rollbacks last quarter.
- Step 2
Stores double as delivery hubs, reaching most U.S. households within 30 minutes, so shoppers visit more.
- Step 3
Groceries earn little per sale, but all that traffic attracts advertisers and paying members. Advertising grew 38% last quarter.
- Step 4
Ads and memberships cost little to add, so they drove almost half of Walmart's profit growth last quarter.
- What shareholders get
Profit funds more price cuts and a $30 billion buyback program, and shareholders also get a dividend.
Advantages
Buying power from sheer size
Major advantageWalmart's deepest advantage. With $706 billion in yearly sales, it buys in volumes few rivals match, which lets it cut prices and still raise guidance.1,5,6
What's changing
Spending the tariff refunds on lower prices
After the Supreme Court struck down the president's emergency tariffs in February 2026, Walmart received about $2.9 billion in refunds. The finance chief says they supplied a big share of last quarter's profit growth. Walmart is spending the money on lower prices and asks investors to judge last quarter and this one together.1,2,5
Competitors
Who else an investor would consider, and how they compare.
| Company | Market value | What it does | Compared with Walmart |
|---|---|---|---|
| Walmartthis stock | $990.25B | Walmart is the largest U.S. retailer, and groceries are about 60% of what Walmart U.S. sells. Low prices draw about 280 million shoppers a week, and that traffic supports higher-margin advertising and memberships. | |
| CostcoCOST | $445.28B | Membership warehouse clubs selling bulk goods at thin markups, profiting mostly from fees. | Costco is Sam's Club's direct rival, and is growing faster in the U.S.1,11 |
| AmazonAMZN | $2.69T | The largest U.S. online store, also selling ads and cloud computing. | Amazon leads online and in ads; Walmart sells far more groceries through its stores.6,13 |
| TargetTGT | $67.46B | Discount stores selling style-focused home goods, clothes and everyday basics. | Target is about one-fifth Walmart U.S.'s size and competes on style, not lowest price.1,12 |
Leadership
Who runs the company, and how the stock has done under the CEO.
When Furner was named (Nov 2025), the stock moved -0.1% that day; the S&P 500 moved 0%.
Wall Street on Furner: MixedAfter Walmart U.S. store sales, excluding fuel, rose only 2.6% in the July quarter, UBS cut its price target to $130 from $141 and JPMorgan to $125 from $137. Most analysts still rate it a Buy.L5,L6
Leadership sources (6) · researched Oct 2026
- L1Walmart Announces John Furner as President and Chief Executive Officer · Walmart, 2025-11-14
- L2Walmart announces top executive leadership changes · Talk Business & Politics, 2026-01-16
- L3Leadership · Walmart, 2026-10-08
- L4John David Rainey · Walmart, 2026-10-08
- L5Walmart Reports Strong Q2 Online Sales, But Store Results Disappoint Analysts · Forbes, 2026-08-20
- L6Walmart stock gains 1.24 percent as target stays above price · ad-hoc-news.de, 2026-10-06
Bull vs. bear: two bets on the same stock
- 1
A share is a small slice of the company. Its value comes from the profits the company will make in the future.
- 2
Nobody knows those profits yet. Buyers (bulls) pay today's price betting they'll beat what most people expect. Sellers (bears) bet they'll fall short.
- 3
When results come in, the price moves toward whichever side was right, and that side makes money.
Once tariff refunds are spent on lower prices, can Walmart grow adjusted operating income 7% to 8.5% this fiscal year on 4% to 5% sales growth?1,2,3,4,5,14,15,16,19,20,21
If advertising and memberships keep growing near 38% and 17%, profit grows about twice as fast as sales even with price cuts, and the premium valuation holds.
- Ads and memberships now drive profit growth. The finance chief says membership, ads and marketplace drove almost half of operating income growth last quarter.
- International and Sam's Club are picking up slack. International sales grew faster than the U.S., and Sam's Club transactions rose 7.0%.
- Part of the U.S. slowdown is a drug-price effect. Lower drug prices under new federal rules cut about 1.25 points from same-store sales, while grocery kept growing.
- Online is now profitable and growing fast. U.S. online sales grew 24%, and the finance chief says extra online sales earn low double-digit margins.
If sales growth stays near 2.6% after the refunds are spent, profit grows little faster than sales and investors stop paying about 34 times expected earnings for a retailer.
- U.S. sales growth is slowing. Same-store sales growth has slowed for two straight quarters, to a six-year low in John Furner's second quarter as CEO.
- The profit jump won't repeat. Walmart guides operating income growth of only 2% to 4% this quarter as refunds go to lower prices.
- Fuel costs squeeze shoppers and Walmart alike. Walmart expects more than $2 billion in extra fuel costs this year, and says shoppers are making more trade-offs.
- The stock is expensive while estimates fall. It trades near 34 times expected earnings, well above its five-year median, even as analysts trim forecasts.
Where Delphi landssellWe think the bear case is more likely than today's price assumes.See why
What to watch
The numbers that will settle the debate.
- Expected earnings per share
- $0.64
- Expected revenue
- $187.24B
What to listen for: Whether Walmart U.S. same-store sales climb back above 3% after more than 11,000 price rollbacks, with operating income growth inside the 2% to 4% guidance.1,15,18
What would prove this wrong
- ✕Walmart U.S. same-store sales stay below 3% after the price cuts.
- ✕Full-year operating income growth falls short of 7%.
- ✕Advertising growth slows below 20%.
- ✕Price cuts become permanent without bringing in more shoppers.
Changed from Hold to Sell as the price moved to $124.86. At this price the expected total return is +5.5%, behind the S&P 500 by 13 points.
- 12-month target
- $130.70 (+4.7%)
- Plus dividend
- +0.8%
- S&P 500, same method, with dividends
- +18.5%
- Expected vs the market
- -13 points
The math behind the recommendation
Three 12-month price scenarios, weighted by probability, compared with the S&P 500 under the same method.
Price rollbacks lift Walmart U.S. same-store sales back above 4%, and ads and memberships keep growing fast.
$3.65 earnings per share × 46 = $167.98
Same-store sales recover to 3% to 4%, and operating income grows near guidance.
$3.47 earnings per share × 36.3 = $125.92
Sales growth stays near 2.6% after the refunds are spent and price cuts squeeze margin, leaving earnings in the lower half of estimates.
$3.40 earnings per share × 31.5 = $106.81
Why these odds: Analysts cut fiscal 2028 estimates over 90 days, and 30 cut this quarter's estimate last month. Walmart met or beat four straight quarters and raised guidance, but same-store sales missed.
How the prices are built: Wall Street expects earnings per share of $3.47 for the year starting a year from now (analysts range from $3.32 to $3.83). Today the stock trades at 40 times next year's earnings per share; its five-year middle is 25.1.1,15,16,17
What tests the call: Fiscal Q3 2027 earnings, the first quarter with refunds spent on prices (Nov 19)
Buy means expected to beat the S&P 500 by 10+ points over 12 months; Sell means expected to trail it by 10+. Inputs gathered Oct 5; the recommendation updates with the price every day. Model-generated, not personalized investment advice. How ratings work · Track record
At $124.86, investors pay about 2.1 times what they pay for the average stock's earnings
Walmart trades at 40 times the earnings analysts expect over the next 12 months. That ratio is the multiple: what investors pay today for each dollar of a year's earnings. That is pricier than it has been 80% of the time over the past five years, when the middle was 25.
Analysts expect earnings to grow about 11% the year after, against about 16% for the S&P 500. The S&P 500 trades at 19 times. To be priced like the average stock, Walmart would need to earn about 2.1 times what analysts expect over the next 12 months. The price is a bet on profits well beyond that.
- Walmart multiple
- 40×
- S&P 500 multiple
- 19×
- Base case
- +1%
- Bear case
- −14%
Price over the next 12 months' expected earnings.
The same measure for the market.
Our most likely 12-month outcome from $124.86.
Bull case +35%.
The skewOur bear case loses about $17.03 for every $1 our base case makes. That ratio, how much you stand to lose against how much you stand to make, is the skew.
Last earnings
No reported quarters available.
Limits of this analysis
Claims that rest on thin or conflicting sources, estimates that had to be extended, and judgment calls.
- ?The 7.5-point tariff refund boost and the almost-half share from ads, memberships and marketplace are the finance chief's spoken estimates from the call; Walmart's release breaks out neither.
- ?Walmart has not said how much of the $2.9 billion in refunds remains or when the price investments end, so fiscal Q3 and Q4 profit could swing either way.
- ?The five-year median of 25 times earnings blends two periods: about 21 to 25 times before mid-2024 and 32 to 45 times since. Using either period alone would change the call.
- ?StockAnalysis does not say exactly which earnings period its forward valuation uses, so the history may not match our next-12-month measure precisely.
- ?Fiscal 2029 earnings extend fiscal 2028 consensus by MarketScreener's 11% growth rate, and the high and low borrow fiscal 2028's spread, so the bull and bear earnings figures are rough.
Sources
Written Oct 5. Numbers link to these sources.
- 1Walmart reports second quarter results (FY27 Q2 earnings release) · Walmart / SEC (Form 8-K), 2026-08-20
- 2Earnings call transcript: Walmart beats Q2 2026 forecasts, shares sink 8.9% · Investing.com, 2026-08-20
- 3Walmart (WMT) Q2 2027 earnings · CNBC, 2026-08-20
- 4Walmart posts worst comparable sales performance in six years · Axios, 2026-08-20
- 5Walmart Q2 earnings: $2.9B tariff refund funds massive price rollbacks · FoodNavigator-USA, 2026-08-21
- 6Walmart reports Q4 results (FY26 Q4 earnings release) · Walmart / SEC (Form 8-K), 2026-02-19
- 7Walmart announces John Furner as President and Chief Executive Officer · Walmart, 2025-11-14
- 8Walmart says longtime CEO Doug McMillon will retire in January · CBS News, 2025-11-14
- 9Walmart Debuts on Nasdaq, Marking Its First Day of Trading · Nasdaq, 2025-12-09
- 10Mizuho cuts Walmart stock price target on delivery network analysis · Investing.com, 2026-07-27
- 11Costco Wholesale Corporation Reports Fourth Quarter and Fiscal Year 2026 Operating Results · Costco Investor Relations, 2026-09-24
- 12Target Corporation Reports Second Quarter Earnings · Target, 2026-08-19
- 13Amazon.com Announces Second Quarter Results · Amazon Investor Relations, 2026-07-30
- 14Walmart CFO says price hikes from tariffs could start later this month, as retailer beats on earnings · CNBC, 2025-05-15
- 15Walmart Inc. (WMT) Analyst Ratings, Estimates & Forecasts · Yahoo Finance, 2026-10-05
- 16Walmart (WMT) Financial Ratios, quarterly · StockAnalysis, 2026-10-05
- 17Walmart Inc.: Financial Data Forecasts Estimates and Expectations · MarketScreener, 2026-10-05
- 18Walmart (WMT) Earnings Dates, Call Summary & Reports · TipRanks, 2026-10
- 19Walmart Q2 FY27 earnings presentation · Walmart / SEC (Form 8-K), 2026-08-20
- 20Facing weary customers, Walmart will use its nearly $3 billion in tariff refunds to lower prices · Fortune, 2026-08-20
- 21Walmart reports first quarter results (FY27 Q1 earnings release) · Walmart / SEC (Form 8-K), 2026-05-21
- 22Walmart shares tumble on weakest US sales growth in six years, soft profit outlook · Yahoo Finance (Proactive), 2026-08-20
- 23Walmart Inc. Form 10-K for the fiscal year ended January 31, 2026 · Walmart / SEC, 2026-03-13
- 24Walmart Inc. Form 10-Q for the quarter ended July 31, 2026 · Walmart / SEC, 2026-08-28