Key Takeaways
- Walmart shares have tumbled 24% following Q1 2026 earnings released in May, now trading around $103.09
- Second quarter revenues reached $187.94 billion, reflecting 5.9% annual growth and surpassing projections, while EPS of $0.81 exceeded the $0.74 forecast
- Management’s Q3 revenue growth forecast of 3% to 3.75% fell short of expectations, causing the steepest daily decline since 2022
- The price-to-earnings multiple has contracted to 37 from a peak of 49, approaching the five-year historical average, while dividend yield stands at 0.95% versus the S&P 500’s 1.04%
- Wall Street maintains a “Moderate Buy” consensus with a mean target of $131.88, though multiple firms have lowered their price objectives recently
Walmart shares began Friday’s session at $103.09, representing approximately 24% below the 52-week peak of $135.15. The decline commenced following the release of Q1 2026 financial results in May, with sustained selling pressure continuing through subsequent months.
The equity currently trades beneath both its 50-day moving average of $111.90 and 200-day moving average of $120.45. Market capitalization stands near $820 billion.
Second quarter results themselves delivered solid performance. Walmart posted earnings per share of $0.81, topping analyst expectations of $0.74. Total revenue of $187.94 billion exceeded the $186.64 billion consensus, marking 5.9% year-over-year expansion.
The disappointment centered on forward projections. Walmart forecasted Q3 net sales expansion of merely 3% to 3.75%. This represented a significant deceleration from the 6.6% revenue growth achieved during the first half of fiscal 2027.
This outlook shortfall sparked the most severe one-day selloff since 2022. Market participants had been willing to pay elevated multiples for accelerating growth, and the anticipated slowdown prompted immediate repricing.
Examining Current Valuation Metrics
The price-to-earnings multiple reached 49 during the early part of this year. It has subsequently compressed to 37, positioning near Walmart’s five-year historical average. However, this doesn’t necessarily signal value. The multiple has dipped below 30 on several occasions within the past five years.
The current dividend yield of 0.95% trails the S&P 500’s 1.04% average, diminishing attractiveness for income-oriented portfolios. Walmart has increased its dividend for 53 straight years, achieving Dividend King recognition, yet yield considerations alone aren’t compelling buyers at present levels.
Net income during the initial two quarters of fiscal 2026 totaled $11.7 billion, representing merely 2% year-over-year growth. Fair value adjustments related to equity investments pressured that figure.
Wall Street Activity and Price Objectives
Institutional holders and hedge funds control 26.76% of outstanding Walmart shares. Pure Financial Advisors established a new stake valued at $8.1 million during Q2. Major holders including State Street, Geode Capital, and Bank of America have expanded or initiated positions in recent reporting periods.
Regarding insider transactions, Executive Vice President Daniel Danker divested 50,644 shares at $105.35 on August 26th, generating approximately $5.3 million. The transaction occurred through a pre-established Rule 10b5-1 trading arrangement designed to satisfy tax liabilities associated with vested equity compensation.
Analyst firms have adjusted their targets downward recently. JPMorgan reduced its objective from $137 to $125 while retaining an “overweight” stance. Telsey lowered its target from $140 to $130 while preserving an “outperform” recommendation. Both Raymond James and KeyCorp continue holding favorable ratings.
The Street consensus remains “Moderate Buy” with a mean price objective of $131.88. Management has established Q3 2027 EPS guidance between $0.62 and $0.64, with full fiscal 2027 projections ranging from $2.80 to $2.87 per share.
Digital commerce expanded 23% while advertising revenue surged 38% in Q2, demonstrating that higher-margin business segments continue delivering robust performance.
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