Walmart (NASDAQ: WMT) stock has been on a rapid growth trajectory since the beginning of 2024. The company continued to post notable revenue increases even as the economy was often uncertain.
Now, the stock has fallen by 24% since it announced its earnings for the first quarter of 2026 in May. Sales growth seems to have slowed, and its Dividend King (Dividend Kings are companies that have increased their dividend for 50 or more consecutive years) status, built on 53 consecutive years of payout hikes, may not be attracting income investors.
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Now, the question is whether Walmart stock is a buy. I argue that investors should treat the retail stock as a hold for now, and here’s why.
The Walmart value proposition
Indeed, Walmart stock likely remains a long-term winner, having sustained its competitive edge for years.
Walmart is now a leading omnichannel retailer. In recent years, it also pivoted into higher-margin businesses such as digital advertising and subscriptions. Additionally, it refocused on a strategy that spurred its competitive edge in its early years — investing in its supply chain to lower fulfillment costs.
Those moves helped fund a growing dividend, but the years of success spurred a rising stock price, and with that, a P/E ratio that peaked at 49 earlier this year. Thus, it got to be priced for perfection, so investors sold off amid the less-than-perfect fiscal Q1 report.
The company became cautious about guidance amid rising gas prices at the time. Conditions do not appear to have changed in fiscal Q2, as the company guided to a 3% to 3.75% rise in net sales in fiscal Q3. That led to its biggest one-day drop since 2022 following the Q2 announcement.
That growth is well below levels from the first half of fiscal 2027 (ended July 31), when its $366 billion in revenue increased by 6.6% from the year-ago period. Also, its net income for the first two quarters of 2026 was $11.7 billion. That was only a 2% yearly gain, as a change in the fair value of equity investments weighed on earnings growth.
Amid those conditions, the stock’s downward momentum continues. That has taken its P/E ratio to 37, a level near its five-year average. Also, its 0.95% dividend yield lags the S&P 500‘s average of 1.04%, making it difficult to attract income investors.
