Key Takeaways:
Walmart shares rose 2.4% to $116.01 ahead of fiscal Q2 earnings, with analysts expecting EPS of $0.74 on revenue of $186.77 billion.
"A weaker consumer may actually be beneficial for Walmart if shoppers trade down from more expensive retailers," Fiona Cincotta, senior market analyst at FOREX.com, said.
The consensus EPS of $0.74 compares with $0.68 a year earlier, an increase of 8.8%, while revenue of $186.77 billion implies growth of 5.3% from $177.40 billion. Walmart's own guidance calls for constant-currency net sales growth of 4% to 5%, modestly below the 5.7% gain in the first quarter, with one preview pointing to 4.6% growth inside that range.
The report, due Thursday, will serve as a key barometer for U.S. consumer health after July retail sales fell 0.6% month over month, the first decline in nine months. Consensus data shows a Buy stance on Walmart with an average 12-month price target of $141.11, roughly $25 above the recent close and implying upside of more than 20%.
Walmart's stock has consolidated above $115 after moving from the low $110s into the mid-$110s in recent days. The shares remain 11.6% below their May 20 level, when the company beat consensus on earnings, revenue and same-store sales but reiterated prior guidance, a move that became a source of market concern.
One bank has trimmed its expectation for Walmart U.S. comparable sales, excluding fuel, to 3.5% growth from an earlier 4%, acknowledging that lower-income consumers are spending more carefully. Even with that moderation, the projection sits against company-wide constant-currency net sales guidance of 4% to 5%.
Longer-term forecasts see adjusted EPS rising from $2.90 in fiscal 2027 to $3.20 in fiscal 2028 and $3.53 in fiscal 2029, with fiscal 2027 sales projected at $753.42 billion. One valuation model applies a multiple of 45 times fiscal 2028 adjusted earnings to arrive at a projected share price of $144.
Walmart's premium valuation is a key risk. According to Zacks Investment Research, the stock trades at 37.6 times forward 12-month EPS estimates, modestly below the 10-year high of 45.4 times reached in February 2026. Market participants expect stocks commanding premium multiples to beat and raise when they report.
The company's alternative revenue streams could support profitability even if core U.S. comparable sales growth stays in the 3% to 4% range. Global e-commerce grew 26% in the first quarter, advertising revenue rose 36%, and marketplace sales jumped almost 50%, while membership fee revenue remained strong.
Walmart has outperformed peers over the past five years, gaining more than 130% versus 60.8% for Amazon, 2.1% for Home Depot and a 40.9% decline for Target, according to Zacks data.
The earnings report will test whether Walmart can justify its premium valuation with a beat-and-raise quarter. Investors will watch the company's full-year guidance, currently set at EPS of $2.75 to $2.85 with constant-currency sales growth of 3.5% to 4.5%, when results are released Thursday.
This article is for informational purposes only and does not constitute investment advice.
