Walmart Inc.

(New York Stock Exchange)
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Somewhat Bullish +45

The Lone Bear on Walmart Stock Raises a Question Wall Street Can’t Ignore

Analyst downgrade Earnings report Guidance raised AI-generated analysis

πŸ“ˆ Walmart beat earnings estimates for a fourth straight quarter with adjusted EPS of $0.81 versus the $0.74 consensus.

πŸ›’ Revenue of $187.9 billion exceeded the $186.8 billion estimate, driven by 23% eCommerce growth and 38% advertising revenue rise.

πŸ“ˆ Management raised full-year adjusted EPS guidance to $2.80-$2.87 from the previous range of $2.75-$2.85.

πŸ’° The stock gained 12.9% over the past month and 21.5% over the past year, trading above its 50-day and 200-day moving averages.

πŸ“‰ Only one of 43 analysts rates Walmart as a Sell, citing a trailing P/E of 45 and forward P/E of 38 as valuation concerns.

⚠️ The consensus price target of $129.38 implies just 2.7% upside from the current quote of $126.02.

πŸ”₯ CFO John David Rainey expects more than $2 billion in incremental fuel-related costs for the current year.

πŸ“‰ Fiscal 2028 EPS estimates fell to $3.2265 from $3.2819, with six downward revisions against two up over 30 days.

πŸ›‘οΈ Membership fee revenue climbed 17%, contributing to the expansion of high-margin advertising and membership segments.

πŸ“Š Net margin stands at 3.07% while the free cash flow yield is 1.49%.

Bullish Signals
  • Walmart beat earnings estimates for a fourth consecutive quarter with adjusted EPS of $0.81 topping the $0.74 consensus.
  • Revenue of $187.9 billion exceeded the $186.8 billion estimate, driven by 23% eCommerce growth and 38% advertising revenue rise.
  • Management raised full-year adjusted EPS guidance to $2.80-$2.87 from the previous range of $2.75-$2.85.
  • The stock gained 12.9% over the past month and 21.5% over the past year, trading above its 50-day and 200-day moving averages.
  • Membership fee revenue climbed 17%, contributing to the expansion of high-margin advertising and membership segments.
Risk Factors
  • The consensus price target of $129.38 implies just 2.7% upside from the current quote of $126.02 due to a trailing P/E of 45.
  • Fiscal 2028 EPS estimates fell to $3.2265 from $3.2819, with six downward revisions against two up over 30 days.
  • CFO John David Rainey expects more than $2 billion in incremental fuel-related costs for the current year.
  • Management warns that rising diesel prices into 2027 will likely offset tariff refund benefits with inflationary pressure.
Full Analysis
Walmart (NASDAQ:WMT) continues to demonstrate strong operational execution, beating earnings estimates for a fourth consecutive quarter with adjusted EPS of $0.81 versus the consensus of $0.74. Revenue reached $187.9 billion, exceeding expectations, driven by significant growth in high-margin segments including a 38% rise in advertising revenue and a 23% increase in eCommerce sales. Management has raised its full-year adjusted EPS guidance to between $2.80 and $2.87, reflecting confidence in the business despite macroeconomic headwinds. Despite the robust fundamentals, Wall Street sentiment remains mixed due to valuation concerns. The stock trades at a trailing P/E of 45 and a forward P/E of 38, which analysts argue limits upside potential given the defensive nature of the retailer. While institutional investors like Renaissance Technologies and D.E. Shaw have added shares, others like Two Sigma have trimmed positions, highlighting a divergence between operational success and price attractiveness. The company faces specific cost pressures that could impact future margins, including an expectation of over $2 billion in incremental fuel-related costs for the current year. Although tariff refunds provided a temporary boost to operating income, management warns that rising diesel prices into 2027 will likely offset these benefits with inflationary pressure. The stock has gained significantly over the past month and year, trading above key moving averages, but the consensus price target implies minimal upside from current levels.