Walmart's Stock Pullback Doesn't Change Strong Fundamentals, Yahoo Finance Says

There is little fundamentally wrong with Walmart despite the sharp decline in its stock following its latest earnings report, Yahoo Finance Executive Editor Brian Sozzi argued.

Walmart continues to report strong revenue and e-commerce growth despite a recent decline in its share price following its second-quarter earnings report. [Photo: Mike Mozart Flickr]

Writing for Yahoo Finance, Sozzi said the market’s negative reaction reflected elevated expectations and slower growth in Walmart US rather than a fundamental deterioration in the business.

Walmart shares fell after the retailer released its second-quarter results.

Walmart reported second-quarter revenue of $187.9 billion, up 5.9% year over year, while global e-commerce sales increased 23%. Operating income rose 28.8%, and the company raised its fiscal 2027 outlook.

However, Walmart US comparable sales grew 2.6%, slower than the 4.6% growth recorded a year earlier.

The company said the result reflected continued e-commerce strength and broad-based gains, partly offset by a 125-basis-point headwind related to pharmacy deflation and changes associated with maximum fair-price regulations.

Sozzi argued that the slowdown mattered because Wall Street expectations for Walmart had become elevated after years of strong performance.

The stock’s reaction, he suggested, was therefore more about expectations and valuation than a major deterioration in the retailer's underlying business.

Walmart CFO John David Rainey also acknowledged some incremental pressure on consumers, citing higher gasoline prices and the resulting need for shoppers to make trade-offs.

However, he said Walmart remained confident in the overall strength of its business.

The company’s latest results show that Walmart continues to grow across its major businesses. Global e-commerce increased 23%, Walmart US e-commerce rose 24%, and Walmart International reported constant-currency sales growth of 7.9%.