At $108 the stock needs about 8% EPS growth next year at a 35 times multiple. I expect closer to 9% growth but a 32 times multiple, putting the stock near $99 in twelve months.
Key points
- 38 times FY2027 mid-point EPS of $2.84 is what $108.12 requires today.
- $3.10 is my FY2028 EPS, from 4.5% sales growth, 7% operating-income growth and 7.85 billion shares.
- 32 times that EPS is $99, an 8% drop from the last close.
The call
The price requires FY2028 EPS near $3.09 if the multiple stays 35 times, which is 9% growth off this year’s $2.84 guide. That growth has to come after one-time tariff refunds of $2.9 billion that already lifted Q2 operating margin to 5.0%.
I believe EPS reaches $3.10, but the multiple compresses to 32 times as refunds roll off and capex stays 4% of sales. Digital ads and marketplace help mix, yet U.S. comparable sales excluding fuel were only 2.6% and pharmacy regulation still subtracts 125 basis points.
Operating margin by quarter (%)SEC company facts as of Oct 2026; E is my forecast
Valuation
| Line | Figure |
|---|
| FY2027 adj. EPS (guide mid) | $2.84 |
| My FY2028 EPS | $3.10 |
| Exit multiple | 32 times |
| 12-month target | $99 |
| Implied return vs $108.12 | -8% |
| Trailing dividend | $0.99 a year |
A 32 times multiple matches a 4, 5% retailer growing operating profit at 7%, not a 38 times software multiple. Asymmetry is modest: if ads keep compounding you lose little versus the market; if refunds prove one-off you lose the extra 6 multiple points. That is a sell, not a strong sell.
What $108 requires versus my FY28 EPSMy estimate from guidance, tax rate and share count
Risks
- Advertising and marketplace incremental margins stay in the low teens and offset price cuts faster than I model.
- Fuel costs fall and low-income traffic recovers, lifting U.S. comps above 4%.
- Capex drops back toward 3.5% of sales and free cash flow surprises high.
What would change my mind
Two consecutive quarters of U.S. eCommerce incremental margins above 15% with comps excluding fuel above 4% would justify keeping 35 times.