Walmart (WMT) Stock Falls 9% Despite Strong Earnings and Higher 2026 Outlook

Walmart shares dropped about 9% on August 20, 2026, closing near $104 after opening at $114.30. The sell-off came despite a clear earnings beat. Walmart posted adjusted EPS of $0.81, topping the $0.74 estimate. Revenue reached $187.9 billion, up 5.9% year over year. 

The culprit was guidance. U.S. comparable sales rose just 2.6%, missing the 3.7% consensus and marking the weakest pace since 2020. Investors focused on what comes next, not what already happened.

Q2 Results Beat Estimates Across The Board

Walmart’s (NASDAQ: WMT) second quarter told two stories at once. Adjusted earnings per share hit $0.81, a 19% jump from last year. Revenue of $187.9 billion cleared Wall Street’s $186.8 billion target. Global e-commerce sales climbed 23%. Gross profit rate reached 25.4%, helped by roughly $2.9 billion in tariff refunds. 

GAAP net income told a different tale, falling to $6.37 billion from $7.03 billion a year earlier. That gap between adjusted and GAAP numbers gave investors something to question.

US Comparable Sales Hit A Six-Year Low

The real disappointment sat in Walmart’s core U.S. business. Comparable sales grew 2.6%, well short of the 3.7% analysts expected. It was the slowest pace in more than six years. Drug price caps cut 0.8 points from health and wellness sales. Management pointed to higher gas prices squeezing household budgets. Walmart plans to spend its tariff refund lowering prices in Q3, a move meant to protect market share even if it pressures margins near term.

Weak Q3 Guidance Overshadowed The Raise

Walmart guided third-quarter adjusted EPS to 0.62-0.64, below the $0.68 estimate. Sales guidance of $183.1 billion to $184.5 billion also trailed the $188.3 billion consensus. Timing of Flipkart’s Big Billion Days event will cut Q3 growth by more than 100 basis points, with the benefit shifting to Q4. Walmart still raised full-year adjusted EPS guidance to 2.80-2.87 and sales guidance to roughly 734.7-741.7 billion, though both figures landed below Wall Street’s targets.

Analysts Split Between Valuation And Fundamentals

Wall Street reaction stayed mixed but mostly supportive. Jefferies analyst Corey Tarlowe kept a Buy rating, citing steady transaction growth and e-commerce momentum. RBC’s Steven Shemesh highlighted nearly 10% operating-profit growth excluding tariff refunds. 

UBS analyst Michael Lasser stayed bullish but flagged renewed debate over valuation. Walmart trades near 38 times trailing earnings, a steep multiple for a retailer with a roughly 3% net margin. That premium leaves little room for guidance misses.

Broader Market Context

Walmart’s drop happened on a day Deere jumped 9% after its own earnings beat. The contrast was sharp. Deere surprised a skeptical market, while Walmart disappointed a market pricing in near-perfect results. 

Walmart's earnings miss contrasts with John Deere's success, revealing market dynamics. Plus, energy prices rise and Treasury strategies shift risk profiles. #MarketUpdate https://t.co/GzR78Iqh2v

— Ira Epstein (@IraEpstein1) August 20, 2026

Peers like Target and Costco now face fresh scrutiny over consumer spending trends. Bond yields sitting near multi-decade highs add pressure on retail stocks broadly, making guidance quality more important than the headline beat itself.

Final Thoughts

Walmart’s quarter beat expectations, yet guidance defined the reaction. A six-year-low in comparable sales and soft Q3 forecasts outweighed the earnings beat. At current valuations, Walmart stock leaves little margin for disappointing Wall Street again.

Disclaimer:

The content shared by Meyka AI PTY LTD is for research and informational purposes only. Meyka is not a financial advisory service, and the information provided should not be treated as investment or trading advice.