Walmart is doing better than you think, this analyst says

Roth Capital Markets analyst Bill Kirk maintained his “Buy” rating and US$108 target price on Walmart (Walmart Stock Quote, Chart, News, Analysts, Financials NYSE:WMT) in an Aug. 22 report, saying that while second-quarter earnings missed expectations, he sees earnings upside reemerging as soon as the third quarter.

“Walmart delivered a comp sales beat, but missed on earnings,” Kirk said. “Increased insurance claim expenses were a surprise $0.04 to the quarter ($0.07 year-to-date), but, even with surprise expenses, better comp sales allowed FY’26 EPS guide to be ~unchanged (ex. FX). We believe the consistency and P&L leverage that investors crave will return. We still see the same, unique opportunities around: automation; advertising; reach; advanced tech; and consumer proposition.”

Walmart reported Q2 sales of US$177.4-billion, ahead of consensus at US$175.9-billion and Roth’s US$176.7-billion estimate. Total U.S. comparable sales excluding fuel rose 4.8%, beating the 4.1% consensus. Adjusted EPS came in at US$0.68, short of the US$0.73 consensus. Consolidated gross margin was up four basis points year-over-year, compared with +12 bps in Q1 and +53 bps in Q4.

“Gross margin was lighter than expected. However, adjusted for business restructuring costs at Sam’s Club, gross margin expanded +9 bps,” Kirk said.

He pointed to insurance-related claim expenses as “the largest surprise to the print,” but emphasized, “The business itself? No change. Just continued market share gains and widening moats.”

Walmart raised its fiscal 2026 net sales growth outlook to 3.75–4.75% from 3–4%, slightly above the Street’s 3.5% forecast. It kept operating income growth guidance at 3.5–5.5% and now expects adjusted EPS of US$2.52–US$2.62, compared with its previous US$2.50–US$2.60 range and consensus at US$2.61. For the third quarter, Walmart guided to net sales growth of 3.75–4.75%, operating income growth of 3–6%, and adjusted EPS of US$0.58–US$0.60.

For Q3 2026, Roth is modelling U.S. comparable sales growth of 4.0%, consolidated net sales of US$177.9-billion, and adjusted EPS of US$0.64, all unchanged from prior forecasts. For fiscal 2026, Kirk now projects U.S. comparable sales growth of 4.4% (from 4.2%), consolidated net sales of US$711-billion (from US$710.2-billion), and adjusted EPS of US$2.66 (from US$2.70).

He also forecasts Walmart will generate US$45.6-billion in Adjusted EBITDA on revenue of US$711.0-billion in fiscal 2026, improving to US$50.0-billion on US$735.4-billion in revenue in fiscal 2027.

Kirk said that while tariff concerns dominate the conversation, underlying trends remain strong.

“Walmart’s automatization opportunities, data capabilities, and consumer proposition are a rare combination that supports market share gains AND increased profitability. To that end, Walmart unequivocally committed to growing profits faster than sales.”

He added that the combination of stronger Walmart stores, a leading digital platform (marketplace, delivery, logistics, subscription), and a rapidly growing advertising business continues to distance the company from traditional brick-and-mortar competitors.

“Its model is inflecting toward a more profitable, less volatile, wider-reaching ecosystem,” Kirk wrote. “The ad opportunity, combined with absolute cost savings via automation, puts Walmart in a unique position to attack market share. We believe Walmart’s ad revenue as a percentage of GMV is less than half of industry peers.”

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