Walmart Q2: Strong Buy?
Hello! Today, I've brought this topic to you! Walmart (WMT) just dropped its fiscal 2026 second-quarter results, and investors are buzzing! Was it a home run or a slight stumble? In the fast-paced world of retail and investing, understanding the nuances of a company's performance is crucial. We're diving deep into Walmart's latest earnings report to help you decide if WMT stock is a buy, sell, or hold for your portfolio!
Walmart's fiscal 2026 second-quarter results presented a fascinating mix of encouraging trends and short-term pressures. On the bright side, the retail giant's top line surpassed Wall Street estimates, a clear sign of robust sales performance. Their online business continued its impressive streak, demonstrating double-digit growth and highlighting Walmart's agility in the ever-evolving e-commerce landscape. Management even raised its full-year sales and earnings guidance, signaling strong confidence in continued growth despite potential cost increases from tariffs.
However, the picture wasn't entirely rosy. For the first time since May 2022, the company’s earnings fell short of expectations. This miss was primarily influenced by one-time costs, including restructuring charges, higher insurance claims, and litigation settlements. These factors weighed on net income, even as underlying operations remained strong.
Investors initially reacted with caution, sending WMT shares down approximately 4.5% on August 21st. Yet, it's worth noting Walmart's strategic strengths: its unwavering emphasis on value, increasingly faster home deliveries, and a growing customer base that now includes more higher-income households. These elements have helped Walmart outperform many of its peers, even in challenging times.
Example: Think about how you shop for groceries. Walmart's seamless online ordering coupled with quick store-fulfilled delivery, which jumped nearly 50% year-over-year, makes it incredibly convenient. This customer-centric approach is a key driver behind their consistent growth.
Let's zoom out and look at the broader context of Walmart as an investment. Based in Bentonville, Arkansas, Walmart operates as a technology-driven omnichannel retailer, seamlessly integrating brick-and-mortar stores, wholesale clubs (Sam's Club), e-commerce sites, and mobile applications. With a staggering market capitalization of $772 billion, it's a behemoth in the retail sector, reporting across three primary segments: Walmart U.S., Walmart International, and Sam’s Club U.S.
When it comes to stock performance, WMT has been a strong contender. Over the past 52 weeks, WMT stock has climbed 28%, significantly outpacing the S&P 500 Index ($SPX), which gained 16% over the same period. Year-to-date, WMT has risen 7%, tracking slightly behind the S&P 500’s 10% advance. This consistent outperformance over a longer horizon speaks volumes.
From a valuation perspective, WMT stock trades at 38 times forward adjusted earnings, reflecting strong investor confidence in its future profitability. Its 1.15 sales multiple remains slightly below sector averages, potentially indicating relative value for investors.
And for those who love a steady income stream, Walmart is a true champion! The company has maintained a consistent commitment to shareholders, growing dividends for over 50 consecutive years, earning it a coveted spot among the Dividend Aristocrats. Its annual payout of $0.94 per share provides a 0.97% yield, with the next quarterly dividend of $0.235 per share scheduled for January 5, 2026, for shareholders of record as of December 12, 2025. Talk about reliability!
Let's break down the specific figures from Walmart's Q2 earnings report to understand the full picture.
- Revenue Growth: Walmart’s revenue in Q2 2026 increased a healthy 4.8% year-over-year (YOY) to $177.4 billion, comfortably beating analysts’ estimates of $176.16 billion. This demonstrates strong overall demand for Walmart's offerings.
- Comparable Sales: Both key U.S. segments showed impressive growth. Comparable sales in Walmart U.S. grew 4.6%, surpassing the projected 4%, while Sam’s Club posted a 5.9% increase, exceeding the expected 5.2%. These figures highlight robust demand across physical stores.
- E-commerce Dominance: Digital sales continue to be a powerhouse. Global online sales were up a remarkable 25%, with U.S. e-commerce specifically rising 26%. The company's focus on speedy delivery is paying off, as store-fulfilled delivery of groceries and other items in the U.S. jumped nearly 50% YOY, with roughly one-third of orders expedited.
- Advertising Boost: Walmart is also successfully monetizing its digital ecosystem through advertising. Globally, advertising revenue grew an impressive 46% YOY, partly thanks to contributions from Vizio, the smart TV maker acquired last year. In the U.S., Walmart Connect revenue increased 31%.
- Profitability: The company’s net income jumped a significant 56.1% to $7 billion. However, adjusted EPS rose only marginally YOY to $0.68, missing the expected $0.74 due to those aforementioned one-time charges.
Despite the EPS miss, the underlying operational strength, particularly in sales and e-commerce, paints a very positive picture for the company's core business health.
So, what do the experts think about Walmart's future? Management's updated guidance is optimistic, anticipating net sales growth of 3.75% to 4.75% for fiscal 2026, an increase from their prior guidance of 3% to 4%. Adjusted EPS is projected between $2.52 and $2.62, slightly higher than the previous range.
Analysts generally echo this positive sentiment:
- Q3 2026 EPS: Expected to grow 3.4% YOY to $0.60.
- Full-Year Fiscal 2026: Bottom line projected to grow 3.6% to $2.60.
- Fiscal 2027: Projections point to an even stronger 12.3% EPS rise to $2.92.
Individual analyst firms have weighed in with their updated views:
- Bernstein SocGen Group raised its price target from $113 to $117, maintaining an “Outperform” rating, signaling confidence in the company’s long-term trajectory.
- Telsey Advisory Group analyst Joseph Feldman also set a target of $118, emphasizing steady growth potential.
- Conversely, JPMorgan analyst Christopher Horvers lowered his price target on WMT stock to $127 from $130 but retained an “Overweight” rating, noting temporary headwinds from catch-up insurance claims.
The consensus is clear: analysts assign WMT stock an overall rating of “Strong Buy.” Out of 37 analysts covering the stock, a resounding 30 recommend a “Strong Buy," six suggest “Moderate Buy,” and only one analyst recommends “Hold.”
WMT stock’s average price target of $112.50 represents a potential upside of 16% from current levels. For the truly bullish, the Street-high target of $130 reflects a significant 34% potential gain.
Q1. What was the primary reason for Walmart's Q2 earnings miss, despite strong revenue growth?
A. The earnings miss was mainly due to one-time costs, including restructuring charges, higher insurance claims, and litigation settlements, which impacted the net income.
Q2. How has Walmart's stock performed compared to the S&P 500 Index over the past 52 weeks?
A. Over the past 52 weeks, WMT stock climbed 28%, significantly outpacing the S&P 500 Index ($SPX), which gained 16% over the same period.
Q3. What is the overall consensus among analysts regarding Walmart stock, and what does the average price target suggest?
A. Analysts assign WMT stock an overall rating of “Strong Buy.” The average price target of $112.50 represents a potential upside of 16% from current levels.
After a thorough dive into Walmart's latest earnings and market position, the verdict is in. Despite the recent earnings dip caused by one-time factors, Walmart's underlying business is incredibly robust, driven by booming e-commerce, strong comparable sales, and expanding advertising revenue. The company's strategic focus on value, convenience, and reaching a broader customer base is clearly paying off.
Management's raised guidance and the overwhelming "Strong Buy" consensus from analysts, coupled with significant upside potential from current levels, paint a very positive picture. For long-term investors focused on a stable, growing company with a consistent dividend history, WMT appears to be a strong 'Buy' with a promising outlook. The temporary headwinds are just that – temporary – and the core business strength continues to shine through.