Walmart trades at 38 times this year's earnings, a growth-stock price for a grocer. Tariff refunds flattered the latest quarter. I expect the stock to roughly track the market, with a $109.61 target.
Key points
- 38 times this year's adjusted earnings of $2.84 a share (FY27 guidance midpoint) is the price paid.
- $2.9 billion of tariff refunds lifted Q2 profit, and price cuts will absorb part of it in the second half.
- $109.61 target, 1% above the $108.12 price: a hold.
The call
The price requires Walmart to compound earnings near 10% a year for several years while holding a multiple above 33 times. That is a premium to most retailers. Tariff refunds helped the last quarter, so the run rate is lower than reported.
I believe the business is improving. Advertising grew 38% globally, and membership fees grew 17%. But Q3 guidance calls for operating income up only 2% to 4%, and a softer consumer, fuel costs and higher rates cap the upside.
Target price by earnings multiple ($ a share)Own arithmetic on $3.32 forward EPS estimate; price $108.12 on Oct 7, 2026
Valuation
| Step | Figure |
|---|
| FY27 adjusted EPS (guidance midpoint) | $2.84 |
| EPS growth I assume, FY28 and FY29 | 9.5% and 10% |
| Forward EPS, next twelve months, at target date | $3.32 |
| Multiple I apply | 33 times |
| Target price | $109.61 |
A 33 times multiple is a modest discount to today's 38 times, as growth in profit is steady but not accelerating. At 30 times the stock is worth $99.65, and at 36 times $119.58. The gain and loss are balanced, so this is a hold.
Risks
- Price cuts erode the refund windfall faster than expected; watch Q3 operating income growth against the 2% to 4% guide on November 19.
- A weaker consumer under higher fuel and interest rates; watch Walmart U.S. comparable sales, which were 2.6% last quarter.
- Upside: advertising and marketplace profits grow faster than I model, supporting 36 times; watch incremental margins in eCommerce.
What would change my mind
Two quarters of operating income growth above 8% without tariff refunds would move me to a buy, and a falling multiple below 30 times would too.