Key Takeaways
- Walmart shares plunged approximately 10% on August 20 following its Q2 fiscal results, marking the steepest one-day decline in nearly half a decade.
- U.S. comparable store sales growth decelerated to 2.6%, representing a multi-year low and falling short of the previous quarter’s 4.1% figure.
- The retailer exceeded bottom-line expectations with $0.81 EPS versus the anticipated $0.74 and upgraded full-year fiscal 2027 projections.
- BTIG Research maintained its “Buy” recommendation with a $140 price objective, suggesting approximately 32% potential upside from the $105.83 level.
- The Wall Street consensus stands at “Moderate Buy” with an average 12-month target of $131.88 based on 39 analyst ratings.
Walmart (WMT) stock kicked off Thursday’s session at $105.83, remaining over 7% beneath its pre-earnings trading level from the day before its August 20 report. The intraday plunge of close to 10% represented the retailer’s sharpest decline in approximately five years.
The sharp selloff stemmed from decelerating momentum in comparable store sales. Domestic comp sales registered 2.6%, a notable decline from the preceding quarter’s 4.1% and well below last year’s 4.6% growth rate. This marked the softest performance in years, arriving at a moment when market participants are already anxious about consumer purchasing power.
Yet the primary financial metrics painted a contrasting picture. The retail giant delivered earnings per share of $0.81, surpassing the Street’s $0.74 expectation. Total revenue reached $187.94 billion, climbing 5.9% year-over-year and exceeding the $186.64 billion projection. Management also lifted its fiscal 2027 outlook across sales, operating income, and earnings metrics.
According to Gimme Credit analyst Carol Levenson, removing the stock’s reaction and simply examining the financial results would likely lead one to anticipate shares moved higher.
Elevated energy costs continue to weigh on performance. The surge in oil prices is pressuring Walmart’s budget-conscious customer demographic while simultaneously increasing the company’s operational expenses. The third-quarter forecast also disappointed expectations, contributing to the near-term weakness.
Rising fuel prices and geopolitical tensions involving Iran represent factors that analysts are monitoring carefully as potential challenges for the stock moving forward.
Wall Street Maintains Optimistic Stance
Notwithstanding the post-earnings retreat, analyst conviction remains intact. BTIG Research reiterated its “Buy” recommendation on Thursday with a $140 price objective, suggesting roughly 32% appreciation potential from prevailing levels. Tigress Financial projects an even more aggressive target of $155.
D.A. Davidson analyst Michael Baker appreciates that Walmart is leveraging tariff refunds to lower prices, a strategy he views as driving market share expansion. His price target stands at $132. Citigroup reduced its objective from $147 to $132 while maintaining its “Buy” stance. Sanford C. Bernstein reaffirmed its “Outperform” rating.
Among 39 analysts tracking the stock, 35 assign it Strong Buy or Buy ratings. Four recommend Hold. The consensus price target averages $131.88.
Shares currently trade at less than 33 times forward earnings, below the five-year historical average of 35 times. Jefferies analyst Corey Tarlowe noted that “the majority of the downside to EPS revisions is already baked in,” with consensus fiscal 2028 EPS projections at $3.23.
Expanding Business Verticals
Outside traditional retail operations, Walmart’s complementary revenue channels are attracting investor interest. Walmart+ subscription fees and its advertising platform both delivered robust Q2 performance, with Neuberger Berman analyst John San Marco characterizing those outcomes as “every bit as fantastic” as previous quarters.
Walmart currently trades at a valuation discount relative to Costco, a shift from when the two retailers maintained closer parity.
Regarding insider transactions, EVP Daniel Bartlett divested 3,950 shares on September 1 at $105.14 through a pre-established 10b5-1 trading plan. EVP Christopher Nicholas sold 2,900 shares on August 20 at $106.34, likewise through a 10b5-1 arrangement.
WMT’s 52-week trading range spans $98.88 to $135.16, with the 50-day moving average positioned at $110.45 and the 200-day moving average at $119.08.
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