Walmart’s stock fell 9.8% to $103.14 in New York trading on Thursday, its steepest single-day decline since the shares traded near $135 earlier this year, after the retailer reported weaker-than-expected U.S. comparable sales and cut its third-quarter profit guidance.
The decline pushed the company’s trailing price-to-earnings ratio to 36.4x and its forward P/E to 39.5x, levels that some analysts argue overvalue the stock despite recent earnings beats. Technical indicators reflected broad bearish sentiment, with the daily Relative Strength Index at 29.0 and the Commodity Channel Index at -281.9, both signaling oversold conditions. After-hours trading saw a partial rebound, with shares rising 0.07% to $114.38.
The retailer reported adjusted earnings per share of $0.81 for the second quarter, exceeding the $0.74 consensus estimate, while revenue reached $187.9 billion, topping the $186.75 billion forecast. U.S. comparable sales growth slowed to 2.6%, missing the 3.8% estimate and marking the first miss in roughly five years. Management attributed part of the shortfall to the Maximum Fair Price regulation under the Inflation Reduction Act, which shaved 125 basis points off U.S. pharmacy comps.
Walmart’s Q3 outlook fell short of expectations, with adjusted EPS guidance set at $0.62–$0.64, well below the $0.68 consensus. The company raised its full-year fiscal 2027 guidance, projecting sales growth of 4%–5%, operating income growth of 7%–8.5%, and adjusted EPS of $2.80–$2.87, up from the prior $2.75–$2.85 range. For fiscal 2026, Walmart forecasts revenue of $713.2 billion and adjusted EPS of $2.73, a 13% year-over-year increase.
The company’s growth drivers remained mixed. Global e-commerce sales surged 23%, while U.S. marketplace growth accelerated to 52% and advertising revenue via WMT Connect rose 38%. However, underlying operating income growth, excluding a one-time windfall from tariff refunds, settled at the top end of the 7%–10% range. Tariff refunds contributed roughly 750 basis points to Q2 operating income, and management indicated the funds were being reinvested into over 11,000 price rollbacks, up from 7,200 in the first quarter.
Consumer spending trends softened further, with transaction growth decelerating to 1.5% from 3.0% in the prior quarter and average ticket growth slowing to 1.1% from 3.1%. Core U.S. comps excluding pharmacy stood at 3.4%, highlighting the uneven recovery in discretionary spending.
Analysts remain divided on Walmart’s valuation. A fair-value model estimates the stock at $85.57, implying a 17% overvaluation, while the consensus target suggests 22.5% upside. The monthly MACD remains positive, offering a rare technical bright spot amid broader bearish signals.
