Consumer Defensive
49/100
49/100Is WMT-Walmart a buy?
Thursday 20 August 2026
Why now: The stock is gapping down about 8% today to around $105 after a major earnings update, which can reset expectations and create a new long-term entry window only if the forward outlook remains intact. The timing edge is watching whether the post-earnings low stabilizes and whether management’s raised full-year guidance is credible without one-time tailwinds.
Upside: Street consensus target is $139.94, implying about 22% upside from the prior close; from the current print near $105, the upside would be larger if fundamentals hold. Upside depends on the market continuing to pay a premium multiple for Walmart’s services mix shift (advertising, marketplace, fulfillment, membership).
Risks: The key risk is that today’s earnings detail points to a slower core demand trend than investors expected, leading to a sustained valuation reset. A second risk is margin pressure from price investments and mix, which matters more when the stock trades at a high earnings multiple.
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Scorecard
Read:Strong metricsSolid metricsSelectiveCautionUnfavourableN/A
| Scorecard | 49/100 | |
|---|---|---|
| Company Detail | WMT - Walmart Inc. | |
| Price as at 20 August 2026 | $105.43 | |
| Market cap | $909.6B | |
| Quality and Fundamental Score (100) | ||
| Breakout / Early-Momentum /20 | 3/20 | |
| Rev/EPS Momentum /20 | 15/20 | |
| Business Quality /15 | 5/15 | |
| Balance Sheet /15 | 12/15 | |
| Valuation /10 | 4/10 | |
| Industry Relative Strength /10 | 0/10 | |
| Macro / Sector Tailwind /10 | 10/10 | |
| Growth | ||
| Cash runway | Cash generative | |
| Revenue YoY | +4.7% | |
| EPS YoY | +13.3% | |
| FCF YoY | +17.9% | |
| Gross margin | 24.9% | |
| Valuation & Trend | ||
| Trailing P/E | 41.3x | |
| Forward P/E | 39.5x | |
| RSI (14d) | 32 | |
| vs 50d SMA | -7.5% | |
| Support cushion | −3.9% | |
| Sentiment | ||
| Wall Street verdict | Aligned | |
| News tone | Mixed | |
| Dividend | 0.8% | |
How are these colored?
| Metric | Strong metrics | Solid metrics | Selective | Caution | Unfavourable |
|---|---|---|---|---|---|
| Overall score | ≥ 80 | 70-79 | 60-69 | 50-59 | < 50 |
| Business quality /15 | ≥ 12 | 10-11 | 8-9 | 6-7 | < 6 |
| Balance sheet /15 | ≥ 12 | 10-11 | 8-9 | 6-7 | < 6 |
| Market cap | ≥ $20B | $5B-$20B | $2B-$5B | $1B-$2B | < $1B |
| Cash runway | ≥ 3 yr or cash generative | 1.5-3 yr | 0.75-1.5 yr | 0.25-0.75 yr | < 0.25 yr |
| Revenue YoY | ≥ 15% | 5-15% | 0-5% | -5-0% | < -5% |
| EPS YoY | ≥ 20% | 5-20% | 0-5% | -5-0% | < -5% |
| FCF YoY | ≥ 10% | 1-10% | 0-1% | -5-0% | < -5% |
| Gross margin | ≥ 60% | 40-60% | 25-40% | 10-25% | < 10% |
| Trailing P/E | < 15 | 15-25 | 25-35 | 35-40 | > 40 or neg |
| Forward P/E | < 15 | 15-25 | 25-35 | 35-40 | > 40 or neg |
| RSI (14d) | 50-70 | 45-50 or 70-75 | 40-45 or 75-78 | 30-40 or 78-80 | < 30 or > 80 |
| vs 50d SMA | +2% to +15% | 0-2% or 15-25% | -2-0% or 25-35% | -3--2% or 35-40% | < -3% or > 40% |
| Support cushion | 2-10% above | 0-2% | 10-15% | 15-20% | price below support |
| Wall Street verdict | Aligned | — | Mixed | — | Disagrees |
| News tone | Positive | — | Neutral / Mixed | — | Negative |
| Dividend | Yield ≥ 2% & growing | Growing | Flat payer ≥ 1% | Low / flat | Cutting |
Detailed Analysis — Thursday 20 August 2026
What they do
Walmart Inc. is the world’s largest retailer, selling groceries and general merchandise through Walmart and Sam’s Club stores and online. It also earns higher-margin revenue from advertising, marketplace and fulfillment services, and membership fees.
Leadership
John R. FurnerCEO
John R.
John David RaineyCFO
John David Rainey has been Executive Vice President and Chief Financial Officer of Walmart Inc.
Customers & notable contracts
Receiver of capital expenditure: No — Walmart is not primarily funded by customer capital expenditure; it sells to consumers and members, and it funds growth through operating cash flow and supplier terms rather than customer project budgets.
Main customers
- Walmart U.S. shoppers (value-seeking households across income tiers) (Large and diversified consumer base; demand tends to hold up when budgets tighten.)
- Sam’s Club members (Membership-based customers driving recurring fee revenue and higher purchase frequency.)
- Marketplace sellers and brands buying advertising (Third-party sellers and consumer brands pay for ads, fulfillment, and commerce tools tied to Walmart’s online and store traffic.)
Notable contracts
- n/a (Walmart’s business is not typically defined by a small number of named, fixed-value customer contracts.)
Summary thesis
- Walmart is a rare “scale plus services” retailer: the core store network drives traffic, while advertising, marketplace and fulfillment services raise the profit mix over time.
- Over a 1+ year horizon, the thesis rests on continued digital growth and services monetization while maintaining price leadership in a value-focused consumer environment.
- The challenge is that today’s tape shows the market reassessing how reliable near-term results are, so the multiple may not bounce back quickly.
Wall Street alignment
Wall Street: Mostly aligned (2/4 positive)
Analyst consensus
Buy (2.33, 66 analysts) · +22% upside
Institutional ownership
38% institutions, insiders 44.9%
Short interest
1.6% of float short · 3.2 d-to-cover
Smart money tape
+0 net (acc 0 / dist 0, last 26d)
Recent news
News Mixed · last 7d
Show 4 headlines from the last 7d
2026-08-20Earnings·
Walmart reports fiscal second-quarter results; raises full-year earnings outlook but gives cautious near-term view ↗ · Associated Press
Walmart reported fiscal second-quarter profit and said United States comparable sales growth was its slowest pace in about six years, while also lifting its full-year earnings forecast. The mix of slowing core momentum and a modestly higher outlook can support a quality long thesis, but the caution may limit near-term multiple expansion.
2026-08-20Guidance+supportive
Walmart raised its fiscal year sales and earnings outlook, citing strength in its online business, while noting that drug price declines weighed on reported sales. The update supports the view that Walmart is sustaining growth drivers beyond in-store traffic, which matters for durability of earnings.
2026-08-20Guidance−challenging
Walmart misses comparable sales expectations and trims third-quarter growth view, Reuters reports ↗ · Reuters
Reuters reported Walmart missed Wall Street expectations for quarterly comparable sales and guided third-quarter net sales growth below consensus expectations. That combination can challenge a quality-momentum long thesis by signaling softer near-term demand and lower confidence in acceleration.
2026-08-13Other·
Walmart announces timing for its fiscal second-quarter earnings release and conference call ↗ · Walmart Corporate
Walmart said it would release fiscal second-quarter results and host an earnings conference call on August 20, 2026. This is a scheduling announcement and is not, by itself, thesis-changing.
Dividends
Yield (fwd)
0.84%
Latest (TTM)
$0.96
2025
$0.94
2024
$0.83
Payout ratio: 35%
Technicals
Price
$105.43
RSI (14d)
31.9
50d SMA
$113.95
200d SMA
$118.52
vs 50d SMA
-7.5%
vs 200d SMA
-11.0%
Support (swing low)
$101.33 −3.9%
40-day high (R)
$120.38 +14.2%
Next swing high (swing high)
$109.56 +3.9%
Close as of 2026-08-20.
Score breakdown
Scores 49 out of 100 — a mixed overall grade. Sector fit, balance sheet, and earnings trend scored highest. Valuation and business quality weighed on the total. The score is capped by the weak technical setup (deeply below the 50-day and 200-day averages), today’s large gap down, and a valuation that is demanding for a low-margin retailer.
Component scores are on the scorecard above.
Momentum evidence
- As of the last completed daily bar, WMT was in a weak base with RSI near 32, about 7.5% below its 50-day average and about 11% below its 200-day average, with no breakout confirmation and light volume versus its recent baseline.
- The live print is materially lower than the prior close (about -8%), which worsens the near-term trend and raises the bar for calling a durable bottom until the post-earnings range tightens.
Fundamental evidence
- Walmart’s scale and cash generation remain strong: latest annual revenue is $713.16B with net income of $21.89B and free cash flow of $14.92B.
- Returns are solid for a retailer (ROE 22.7%, ROIC 12.7%), leverage looks manageable (net debt to EBITDA 1.42), and financial stress risk appears low (Altman Z-score 6.04).
- Red flags are mainly valuation-driven and working-capital driven rather than solvency: current ratio is 0.77 and working capital is negative, which is typical for big retailers but still reduces flexibility if operating conditions tighten.
- The dividend yield is low (about 0.84%), so shareholder return depends more on buybacks (share count down 6.08% over 5 years) and multiple support than on income.
Cash runway: Cash generative (latest annual free cash flow is positive).
Valuation view
At roughly 41.3x trailing earnings and about 39.5x forward earnings, Walmart is priced more like a “defensive growth plus services” platform than a traditional discount retailer. EV to EBITDA is about 22.1x and EV to free cash flow is about 35.1x, which leaves limited room for execution mistakes; the valuation only works long term if higher-margin services keep scaling and the core remains steady.
Macro tailwind
A value-seeking consumer environment tends to favor Walmart’s traffic and share gains, and the company can use its scale to keep prices low while still investing in delivery speed and convenience.
What to watch
Upcoming (1–6 months)
- Management’s Q2 FY27 earnings call and any clarified full-year guidance details after the initial market reaction.
Ongoing
- U.S. comparable sales trend excluding fuel, growth in advertising and marketplace services, and whether operating income growth remains strong without one-time items.
Long-term case
Over multiple years, Walmart’s opportunity is to turn a giant low-margin retail engine into a more profitable commerce platform by layering in advertising, third-party marketplace, fulfillment services, and membership economics on top of unmatched physical reach. If the company continues improving delivery speed from stores and keeps growing higher-margin services, it can expand profit dollars even when household spending slows. The swing factor is whether investors keep assigning a premium platform multiple to a business that still depends on low-margin retail execution every day.
Risks & invalidation
Risks
- A sustained slowdown in U.S. comparable sales or a need to increase price investments could compress margins and undermine the premium valuation.
- Regulatory or policy-driven impacts (including pharmacy-related pricing or other mandated pricing constraints) could add recurring earnings volatility.
Breaks the thesis
- If the stock continues making new lows after today’s earnings gap and fails to regain the prior resistance level near $120.38 over the next several weeks, it signals the market is re-pricing the business and the long-term premium-multiple thesis is weakening.
Bottom line
Walmart is a high-quality, cash-generating retail leader that is increasingly monetizing its traffic through higher-margin services like advertising, marketplace, fulfillment, and membership. The problem today is not the business’s durability but the price investors were paying for it; with the stock gapping down sharply and valuation still elevated, the next year hinges on whether results look clean and repeatable without unusual boosts. The main swing factor is whether services growth can keep lifting profit mix while the core U.S. demand trend stays steady.