Walmart trades at 38 times this year's earnings after a $2.9 billion tariff refund. I forecast $3.00 a share next year, worth $96, about 11% below today's price.
Key points
- $2.9 billion of tariff refunds in Q2 FY27 lifted profit before matching price cuts later in FY27.
- 38 times guided FY27 earnings at $108.12 a share on Oct 7 2026 pays for lasting double digit profit growth.
- $57.2 billion of borrowings and leases at July 31 2026 plus higher FY27 spending limits free cash flow.
The call
The market treats a one time refund as lasting power. At $108.12 a share the stock pays 38 times earnings this year. That price needs lasting double digit profit growth from low single digit sales growth.
Quarterly revenue with refund reinvestment dip and recovery- Reported revenue
- My forecast
Source: SEC XBRL company facts to Q2 FY27, my forecasts for Q3 FY27E onward. As of Oct 8, 2026.
I see slower profit once the refund is gone. I forecast $3.00 a share in earnings next year as price cuts weigh on margin where margin means profit kept from sales. At 32 times earnings that supports $96.00 a share within a year.
Valuation
| Driver | Estimate |
|---|
| FY28 sales for year ending Jan 31 2028 | $775 billion for FY28 |
| Operating margin for FY28 | 4.55% for FY28 |
| FY28 earnings for year ending Jan 31 2028 | $3.00 a share for FY28 |
| Multiple per dollar of earnings | 32 times FY28 earnings |
| 12 month target within a year | $96.00 a share within a year |
A 32 times multiple on next year earnings still pays up for scale and fast growing ads and membership. Slower peers trade lower. Downside to $90.00 a share within a year outweighs upside to $105.00 a share within a year, so a sell fits the asymmetry.
What $3.00 of earnings is worth at different multiplesSource: my arithmetic on $3.00 FY28E EPS. As of Oct 8, 2026.
Risks
- Price cuts fail to lift trips, which I would see in U.S. comparable sales near 2% in Q3 FY27.
- Fuel and wage costs squeeze profit, which I would see in operating expenses as a share of sales rising in Q3 FY27.
- Pharmacy or legal costs hit profit, which I would see in new charges in Note 5 of the Q3 filing.
What would change my mind
Core sales above 4% in H2 FY27 with rising margin after refunds are reinvested would prove the mix shift is stronger than I think.