Earnings season has a way of reminding investors that even the biggest names on Wall Street can stumble. Walmart (WMT) just got that reminder. The retail giant recently delivered its second-quarter results, and while some parts of the business held up well, the overall report was not as strong as the Street expected. As a result, WMT stock tumbled as investors focused on weaker U.S. comparable sales and a softer earnings outlook for Q3 and the full year.
That reaction becomes even more interesting when valuation enters the picture. Walmart already carries an F valuation grade, putting it among the most expensive names in its consumer-staples retail peer group. In fact, its valuation now looks richer than Nvidia's (NVDA) on some measures, despite the artificial intelligence (AI) chipmaker’s far stronger growth profile.
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This makes Walmart’s Q2 sales growth — the company’s smallest gain in over six years — more than just a disappointing number. It puts its premium valuation firmly under the spotlight. For years, WMT stock has been the classic defensive play, backed by steady demand for groceries, household essentials, and everyday needs. But even that safety net is showing some cracks.
Walmart stock is still well below its 52-week high of $135.15, adding to the pressure. With Walmart priced so richly, investors would want to know how much growth is needed to justify paying such a premium for a retail giant already priced for success.
About Walmart Stock
Most people know Walmart, and chances are you’ve probably walked through one of its stores at some point. What started as a discount retailer in Arkansas has grown into a global retail giant with a much bigger ambition. Today, Walmart serves some 280 million customers every week through more than 10,900 stores and online platforms across 19 countries. The formula is to keep prices low and make everyday shopping as easy as possible, whether customers shop in-person or online.
Walmart has invested heavily in automation, artificial intelligence (AI), faster delivery, and digital advertising, pushing beyond its traditional big-box roots and deeper into the digital economy.
That strategy has helped fuel an extraordinary run. Just months ago, Walmart reached a $1 trillion market capitalization, becoming the first major brick-and-mortar retailer to hit that milestone. The valuation has since cooled, but with a market cap of roughly $847 billion, Walmart is still a retail heavyweight.
WMT stock had a strong run into the spring, but the mood shifted after the company reported Q1 fiscal 2027 results in May. Shares climbed to all-time highs before losing steam as investors focused on management’s more cautious outlook. Since then, WMT stock has given back much of that advance, now 22% below its 52-week peak.
Over the past 52 weeks, Walmart stock is up by around 10%. However, shares haver fallen 5% so far in 2026. The latest selloff made the picture even tougher. WMT stock plunged 9% on Aug. 20, marking its biggest one-day drop in four years. Shares also touched a year-to-date (YTD) low near $102 after Q2 sales missed expectations.
Technically, Walmart stock has shown signs of heavy selling pressure. Recently, the 14-day Relative Strength Index (RSI) dropped to around 29, pushing the stock into oversold territory and suggesting the recent selloff may have gone too far. That said, the 14-day RSI is now closer to 36.
www.barchart.com The recent drop may have cooled shares a bit, but WMT stock is still far from cheap. Shares trade at roughly 36 times forward earnings and 1.1 times sales, both above sector averages and Walmart’s own historical valuation levels. That makes the stock look pricey, especially if growth starts slowing.
The dividend offers at least one steady part of the story. Walmart has raised its payout for 53-straight years, earning it a spot among the elite Dividend Kings. The firm currently pays $0.99 per share annually through quarterly dividends. However, with a yield of only about 0.95%, Walmart is not exactly an income play. Instead, the long dividend record provides some stability as investors wait for growth to pick up again.
A Closer Look at Walmart’s Q2 Numbers
Walmart’s Q2 results were mixed. Total revenue rose roughly 6% year-over-year (YOY) to $187.9 billion, with growth across all of its business units. Adjusted earnings came in at $0.81 per share, up 19% YOY.
Still, the headline growth number came with a catch. Walmart posted its smallest sales gain in more than six years, with U.S. comparable sales rising just 2.6%. That was below analyst estimates and marked the weakest quarterly increase since 2020. Walmart said pharmacy-pricing regulations weighed on the figure.
The slower growth also reflects a broader shift in how Walmart is making money. U.S. e-commerce sales jumped 24%, while global e-commerce climbed 23%, helped by store-fulfilled pickup and delivery and marketplace expansion. Advertising is becoming another important growth engine, with global advertising revenue rising 38%, matching the 38% increase in Walmart U.S. advertising revenue. Global membership fee revenue also increased 17%.
Meanwhile, Walmart said that groceries, toys, fashion, and private-label products performed well, and it continued to gain market share, particularly among households earning $100,000 or more. Lower-income consumers remained cautious, with higher gas prices affecting spending choices. Walmart also cut some prices during the quarter, using part of its $2.9 billion in tariff refunds to support those efforts. Prices were still slightly higher annually because of broader cost increases, but the company stepped up price cuts toward the end of the quarter, particularly on pressure points such as beef.
The balance sheet remains solid. Walmart ended the quarter with $11.5 billion in cash and cash equivalents against $57.2 billion of total debt. Operating cash flow for the six months ended July 31 reached $19.7 billion. The company also repurchased $5.1 billion of stock during the six months, and paid $3.9 billion in dividends.
Looking ahead, Walmart actually raised its fiscal 2027 outlook. Management now expects net sales to grow 4% to 5% at constant currency, up from its previous 3.5% to 4.5% forecast. Adjusted operating income is expected to increase 7% to 8.5%, while adjusted EPS is projected at $2.80 to $2.87.
For Q3, however, the outlook is more cautious. Walmart expects net sales growth of 3% to 3.75%, operating income growth of 2% to 4%, and adjusted EPS of $0.62 to $0.64. That softer near-term outlook may explain why investors are looking beyond Walmart’s solid digital and advertising growth and asking whether the company can keep justifying its premium valuation.
Analysts tracking Walmart anticipate revenue for the quarter to be around $187.1 billion, while adjusted EPS is anticipated to be $0.63. For fiscal 2027, adjusted EPS is expected to rise 9% YOY to $2.87, then surge another 13% YOY to $3.23 in fiscal 2028.
What Do Analysts Expect for Walmart Stock?
Walmart has a consensus “Strong Buy” rating overall. Out of 39 analysts covering WMT stock, 29 analysts advise a “Strong Buy,” six recommend a “Moderate Buy,” and four analysts play it safe with a “Hold” rating.
The mean price target of $129.49 implies potential upside of about 23% from current levels. Meanwhile, the Street-high target of $155 suggests the stock could rally as much as 48% from here.
www.barchart.com On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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