Market Snapshot

WMT fell roughly 9% to $104.12 in premarket trading Thursday, a sharp drop that pushed shares closer to the lower end of their 52-week range even as the company raised its fiscal year sales guidance to 4% to 5% from 3.5% to 4.5% and reported adjusted earnings of $0.81 per share on revenue of $187.9 billion, topping forecasts of $0.74 and $186.8 billion.

The market rejected the beat anyway. That tells you something specific about where Walmart’s multiple is right now.

What Actually Happened

U.S. comparable sales growth of 2.6% missed expectations of about 3.5%, while the company’s raised current-quarter and full-year guidance also fell short of expectations. That roughly 90-basis-point shortfall on comps, against a stock that entered Thursday trading near 40x earnings, was enough to override every other positive in the release.

Comparable sales growth fell to 2.6% in Q2 from 4.1% in the prior quarter, a deceleration that investors cannot dismiss as noise. The health and wellness category faced a headwind from federal Medicare drug pricing rules, pressuring U.S. comparable sales. Strip that out and the underlying comp picture looks more like 3.4%.

The Tariff Refund Problem

The quality of the beat is the core debate. Walmart’s adjusted EPS of $0.81 beat the $0.74 consensus, driven in large part by a $2.9 billion tariff refund that expanded gross margins rather than by underlying retail momentum alone.

Walmart is not the only big retailer logging tariff refunds. The Supreme Court ruled on February 20, 2026 that President Donald Trump overstepped his authority in imposing sweeping tariffs under an emergency law. The Court did not itself order how refunds must be handled, but it set the stage for the refund process that has been playing out across the sector. The size of Walmart’s refund did the most work in Thursday’s operating income line.

Operating income reached $9.4 billion, a 28.8% jump that included a boost from tariff refunds; on an adjusted, constant-currency basis, operating income grew 17.4% to $9.2 billion. Without the refund, the operating income picture is still good, but it is not the headline number.

The Q3 Guide Is the Real Story

Q3 guidance of adjusted EPS of $0.62 to $0.64 is a deliberate choice to compress near-term profit in favor of competitive pricing. That is below the $0.66 consensus. Walmart’s EPS guidance for next quarter missed, and its full-year EPS guidance also fell short of Wall Street’s estimates.

Two forces are compressing Q3 simultaneously. CFO John David Rainey said the timing of Flipkart’s Big Billion Days sale will shift between the third and fourth quarters, creating a headwind of more than 100 basis points to third-quarter sales growth. Q3 guidance also reflects the continued impact of pricing actions taken in Q2, alongside continued prioritization of tariff refunds into price investment. Rainey’s ask: evaluate Q2 and Q3 together.

Stocks in Focus: WMT

• What happened: Beat on revenue and EPS, raised full-year guidance, stock dropped nearly 9%.
• Why it matters: Management said it is reducing prices to compete for market share, a strategy that could weigh on profitability while supporting customer traffic. At a 40x multiple, that trade is not priced as attractive.
• What to watch: Jefferies analyst Corey Tarlowe kept a Buy rating, and RBC Capital Markets analyst Steven Shemesh also remained positive. The analyst consensus is still constructive. The stock needs the Q3 comp recovery to show up on schedule.

Sector Watch: The Ad Engine Running Inside Retail

The part of Walmart’s quarter that is structurally durable has nothing to do with store traffic. Global eCommerce net sales increased 23%, while global advertising revenue rose 38%. Walmart Connect in the U.S. grew 43%.

Adjusting the Walmart U.S. comparable sales figure for the health and wellness drag, comps were effectively 3.4%. When ad and membership mix keeps rising, the comp deceleration matters less to long-term earnings power. But not at 40x.

Walmart closed its acquisition of self-serve connected TV platform Vibe.co earlier this month. That deal, reportedly valued at about $1.4 billion, combined with the 2024 VIZIO acquisition, is expected to make Walmart a more formidable rival in streaming advertising against Amazon. When ad and membership mix keeps rising, the comp deceleration matters less to long-term earnings power. But not at 40x.

Catalyst Calendar

• Q3 Comparable Sales (Nov. 2026): The recovery in U.S. comps that management is promising. If the price-cut elasticity doesn’t materialize, the guidance raise looks hollow.
• Flipkart Big Billion Days (Q4): A Q3 headwind of over 100 basis points as Walmart laps last year’s event is expected to reverse in Q4, when this year’s sale provides a comparable benefit. Watch the Q4 international line.
• Walmart Connect / VIZIO integration: Walmart, ahead of Cannes in June, laid out a vision for a unified global commerce media machine combining in-store, ecommerce, marketplace, offsite media, membership, and CTV under Chief Growth Officer Seth Dallaire. The revenue monetization timeline is the next quantifiable milestone.

Technical Radar

If Thursday’s losses hold, WMT will erase its year-to-date lead and open at its lowest level since November. Prior to this price action, familiar pressure at the $116 level had been keeping a lid on the stock’s most recent rally. The premarket low of roughly $104 is now the level to watch. A close below it on volume confirms distribution; a recovery above $108 intraday shifts the short-term tone.

Risk Radar

• Tariff refund one-time boost: Management expects the financial impact from tariff refund receipts and reinvestment to be largely contained within the current fiscal year. That means the Q1 FY2028 comparison gets harder, not easier.
• Price investment lag: CFO Rainey acknowledged on the call that there is elasticity but with a lag. If that lag extends into Q4, the Q3 comp miss could repeat.
• Valuation asymmetry: Before the report, the market was pricing WMT at a trailing price-earnings ratio of about 40, with investors seeking confirmation that higher-growth digital segments justify that multiple. A 9% drop on a guidance raise signals that bar is not yet cleared.
• Free cash flow pressure: Free cash flow fell to $5.5 billion, a $1.4 billion decline driven by a $2.8 billion increase in capital spending tied to the company’s omnichannel buildout.

The Cheat Sheet

• Top Market Theme: A beat-and-drop earnings reaction signals that quality of earnings matters as much as the headline number when a stock carries a premium multiple.
• Stock to Watch: WMT. The 9% drop creates a potential entry point if you believe the ad-and-membership margin flywheel is structural. The Q3 comp recovery is the catalyst that proves or disproves that view.
• Sector to Watch: Retail advertising. Walmart Connect growing 43% and global ad revenue up 38% confirm that large-format retailers are becoming media companies. The read-through hits Trade Desk, The Trade Desk’s retail media clients, and any platform competing for retail ad budgets.
• Biggest Risk: The $2.9 billion tariff refund masked the true trajectory of U.S. store comps. If price investments don’t generate enough unit lift by Q3, the full-year EPS guide of $2.80 to $2.87 looks optimistic against a consensus that already expected $2.90.
• Biggest Opportunity: UBS analyst Michael Lasser said the results could intensify debate around Walmart’s valuation but maintained a bullish view. The consensus target of $137 to $140 implies about 30% upside from Thursday’s premarket low. If Q3 comps recover to about 3.4%, the selloff will look overdone.
• One Thing to Remember: Walmart’s operating income grew much faster than its comparable sales rate this quarter, a ratio management says hasn’t been seen in two decades. The stock dropped because the comp missed and the Q3 guide disappointed. The business itself is not broken. The multiple was.