Radek Strnad
3 min read
What Happened?
Shares of retail behemoth Walmart (NASDAQ:WMT) fell 9.9% in the morning session after Walmart U.S. comps decelerated from 4.8% a year earlier to 2.6% — the slowest growth since about 2020 — and missed the ~3.7% forecast many had modeled. Revenue of $187.9 billion rose 5.9% and cleared estimates of about $186.8 billion, while adjusted EPS of $0.81 beat the $0.74 consensus by roughly 9%. Operating and free-cash-flow margins held near year-ago levels (about 5% and 4%). The market focused elsewhere:
Walmart U.S. comps decelerated from 4.8% a year earlier to 2.6% — the slowest growth since about 2020 — and missed the ~3.7% forecast many had modeled. Management guided Q3 net sales growth to roughly 3%–3.75% in constant currency and adjusted EPS to $0.62–$0.64, below a ~$0.68 consensus. Walmart still raised full-year adjusted EPS guidance to about $2.80–$2.87 (midpoint ~$2.84), and CFO John David Rainey said the business model looks more durable — but at a rich multiple, the soft comps and light Q3 setup mattered more than the beat. Tariff-refund benefits also boosted margins; management said it plans to reinvest those savings into price, which can help customers later but doesn’t erase the near-term growth miss.
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What Is The Market Telling Us
Walmart’s shares are not very volatile and have only had 2 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock dropped 6.8% on the news that the company reported a weaker-than-expected earnings outlook, which overshadowed its solid first-quarter results. Despite revenue in the first quarter of $175.7 billion beating expectations and adjusted earnings per share meeting them, investors focused on the disappointing forecast for the upcoming quarter and the full year.
The company’s revenue guidance for the second quarter came in at $185.4 billion at the midpoint, below analysts’ estimates of $186.4 billion. Furthermore, the company’s full-year earnings guidance also missed Wall Street’s expectations. The market’s negative reaction underscores that the cautious forward-looking statements proved more significant to investors than the stable performance in the reported quarter.
