Published on: 2026-08-21
Updated on: 2026-08-21
Walmart beat earnings expectations and raised its full-year outlook before markets opened on August 20. By the closing bell, the stock had fallen 9.2%. Slower U.S. sales and near-flat Q3 earnings growth justified part of the selloff, while 24% e-commerce growth and a pharmacy-related sales distortion show the underlying quarter was stronger than the share-price reaction suggests.
Walmart U.S. comparable sales slowed from 4.1% to 2.6% quarter over quarter, while transaction growth fell from 3.0% to 1.5%.
Excluding health and wellness, comparable sales still slowed from 4.7% to 3.4%, showing pharmacy pricing explains only part of the weakness.
U.S. e-commerce grew 24% and contributed about 5.1 percentage points to a total comparable-sales increase of just 2.6%.
Q3 EPS guidance of $0.62–$0.64 implies only about 1.6% year-over-year growth at the midpoint, despite the stronger full-year outlook.
At $103.84, Walmart trades near 36.6 times the midpoint of FY27 adjusted EPS guidance, leaving valuation as the deciding issue after the selloff.
The 9.2% selloff was primarily a reset in expectations for Walmart’s future growth. Revenue rose 5.9% to $187.94 billion, adjusted EPS reached $0.81, and full-year adjusted EPS guidance increased to $2.80–$2.87.
Walmart entered the report at $114.30. The drop to $103.84 erased roughly $83 billion of equity value in one session. Slower U.S. sales, weak Q3 earnings growth and a demanding valuation outweighed the headline beat, cutting the price attached to future growth rather than signalling a breakdown in the underlying business.
Walmart U.S. comparable sales grew just 2.6%, the weakest pace in more than six years. Pharmacy deflation linked to Maximum Fair Pricing created an estimated 125-basis-point drag, although removing health and wellness does not erase the slowdown.
Traffic weakened alongside sales while average ticket growth held at 1.1%. The quarter-to-quarter comparison shows the deterioration across headline sales, pharmacy-adjusted sales and transactions.
| Walmart U.S. metric | Q1 FY27 | Q2 FY27 | Change |
|---|---|---|---|
| Comp sales ex fuel | 4.1% | 2.6% | -150 bps |
| Ex health and wellness | 4.7% | 3.4% | -130 bps |
| Transactions ex fuel | 3.0% | 1.5% | -150 bps |
Walmart still gained market share across income groups, making the deceleration more consistent with softer spending and traffic than a broad loss of competitive position.
Q3 adjusted EPS guidance of $0.62 to $0.64 compares with $0.62 a year earlier, implying growth of only about 1.6% at the midpoint. Adjusted operating income is expected to rise just 2% to 4%.
The slowdown looks especially sharp beside Q2, when adjusted operating income rose 17.4% in constant currency. Tariff refunds added roughly 7.5 percentage points to that growth, leaving the underlying increase near the top of Walmart’s previous 7% to 10% range.
Walmart received nearly $2.9 billion of tariff refunds and directed part of the benefit toward more than 11,000 price rollbacks. Q2 therefore benefited from unusually favorable economics that will not carry into the second half in the same form.
Walmart U.S. e-commerce grew 24%, store-fulfilled delivery increased about 40%, and marketplace sales rose more than 50%. Walmart’s stores are increasingly doubling as fulfillment hubs for digital orders rather than functioning as a separate sales channel.
E-commerce contributed about 5.1 percentage points to comparable-sales growth even though the final U.S. comp increased only 2.6%. The difference is not a direct measure of store-sales decline, yet it shows how much of Walmart’s incremental growth is now coming through digital channels.
Global advertising rose 38%, Walmart Connect grew 43% excluding Vizio, and membership-fee revenue increased 17%. Marketplace, advertising and membership are giving Walmart more sources of growth beyond traditional merchandise sales.
A 9% cheaper Walmart is still not a cheap Walmart. At $103.84, the stock trades at roughly 36.6 times the $2.835 midpoint of FY27 adjusted EPS guidance. At the $114.30 pre-earnings close, the same earnings midpoint implied about 40.3 times earnings. The selloff cut the multiple sharply without making Walmart inexpensive.
The premium was already visible before earnings. Walmart traded at 36.98 times forward 12-month earnings, above the industry average of 33.98 times, although below its one-year median of 38.67 times. Those figures use a different forward-earnings basis from the guidance calculation above, but they confirm that substantial growth expectations were embedded in the stock before the report.
A mid-30s multiple still requires dependable earnings growth. Q3 guidance instead points to almost no EPS expansion, while U.S. sales and transaction growth have already lost momentum. Walmart needs earnings growth to reaccelerate if the remaining valuation premium is to hold.
The 9.2% reaction had a fundamental basis. The evidence points more toward multiple compression than a breakdown in Walmart’s long-term growth story. Digital growth, market-share gains and a broader revenue mix remain intact, while the price attached to that growth has become harder to defend.
Walmart raised FY27 sales growth guidance to 4%–5%, adjusted operating-income growth to 7%–8.5%, and adjusted EPS to $2.80–$2.87. Q3 faces a less favorable mix as tariff-refund benefits are reinvested into lower prices, while the timing of Flipkart’s Big Billion Days also reduces reported quarterly growth.
The 2.6% comp points to softer spending, not a collapse in demand. Transaction growth slowed and lower-income households became more cautious, yet Walmart continued gaining market share across income groups, including higher-income households.
No broad customer exodus is visible. Walmart U.S. transaction growth slowed from 3.0% to 1.5%, but market share still increased across income groups. The weaker quarter reflects slower growth in visits rather than a clear competitive shift away from Walmart.
Yes, relative to the earnings growth currently implied by guidance. At $103.84, Walmart trades near 36.6 times the midpoint of FY27 adjusted EPS guidance. The selloff lowered the valuation sharply, but Q3 EPS growth near 1.6% leaves the remaining multiple demanding.
Walmart reports Q3 FY27 results on November 19, 2026. A rebound in U.S. transactions alongside sustained digital growth and stronger operating-income momentum would make the August selloff look overdone. Another quarter of sub-3% comps and low-single-digit profit growth would make a mid-30s earnings multiple much harder to defend.
