Walmart Inc.

WMT · NASDAQ · USD

Can Walmart keep growing profit faster than sales as higher fuel and insurance costs and drug-price caps offset gains from advertising, marketplace and faster delivery?

Last 4 earnings calls · through Q2 FY2027

Bull case

  • Omnichannel delivery advantage

    The bull case is that stores close to most U.S. households let Walmart deliver faster and cheaper than rivals, which brings customers back more often.

  • Higher-margin platform businesses

    Advertising, marketplace and membership are growing faster than retail and carry better margins, so the same sales growth now produces more profit than it did a few years ago.

  • Price leadership and share gains

    Everyday low prices and a much larger rollback count are winning customers across income groups, and management has raised its outlook as those share gains hold.

  • International and Sam's growth

    Faster-growing international markets and the Sam's Club format now supply a rising share of growth, so results depend less on the mature U.S. store base.

Bear case

  • U.S. comparable sales slowdown

    The bear case is that U.S. comparable sales have slowed as pharmacy pricing changes and stretched households pull back, and in-store purchases are falling.

  • One-time profit boosts

    Recent profit growth leaned on tariff refunds and cost timing rather than the underlying business, so reported earnings overstate the improvement in earning power.

  • Rising fuel and insurance costs

    Higher fuel, depreciation and insurance costs are absorbing much of the savings from automation, and management keeps finding new expenses to work through.

  • Low-income household pressure

    Lower-income households are managing budgets paycheck to paycheck, which limits how much volume growth Walmart can pull from its core value customer.

Bull and bear points

Growth & Execution

In short: E-commerce and international markets are growing quickly, while U.S. store sales have slowed.

Bull · 2

  • Guidance raised after a deliberately conservative start

    In February management guided to sales growth of 3.5% to 4.5% and operating income growth of 6% to 8%; it now expects 4% to 5% and 7% to 8.5%, even with added fuel cost.

    Tone shiftQ4 FY2026 → Q2 FY2027

  • International grows several times faster than the U.S. segment

    International revenue rose 12.8% to $35.2 billion, led by China and India, so company growth no longer depends only on the mature domestic store base.

    Filed financials
Bear · 2

  • Walmart U.S. comparable sales have slowed to 2.6%

    Comps slowed as drug-price caps cut pharmacy sales and in-store comps turned slightly negative, so the largest segment now grows slower than the company overall.

    Q2 FY2027 call

  • Lower-income customers are cutting back on essentials

    Management said the number of gallons bought per fuel stop fell below ten for the first time since 2022, a sign that squeezed households are economizing and buying less.

    Q1 FY2027 call

Profitability & Financial Strength

In short: Margins are expanding on better business mix, though recent profit growth leaned on one-time tariff refunds.

Bull · 2

  • Merchandise mix now helps gross margin instead of hurting it

    Gross margin rose to 26.1%, up a full point, and management said the first quarter was the first time in 18 quarters that product category mix added to U.S. gross margin.

    Tone shiftQ3 FY2026 → Q1 FY2027

  • Advertising and membership carry about a third of profit

    These fee-based businesses grow faster than retail and carry higher margins, which is why the operating margin rose to 5.0% while sales grew about 6%.

    Q4 FY2026 call
Bear · 1

  • Quarterly profit growth leaned on one-time tariff refunds

    About 750 basis points of the reported operating income growth came from tariff refunds that are being reinvested in price, which is why third-quarter operating income growth is guided to only 2% to 4%.

    Q2 FY2027 call

Market Position

In short: Scale and low prices keep winning share, but drug-price caps and pricing lawsuits pressure results.

Bull · 1

  • Price gaps to conventional grocers keep widening

    Management ran more than 11,000 rollbacks in the quarter and said gaps to conventional grocers are strong and widening, which is how Walmart keeps taking share from other formats.

    Q2 FY2027 call
Bear · 1

  • Drug price caps now sized at a 125 basis point drag

    Management first said it was too early to put a number on the maximum fair pricing rule; it now expects the rule to cut Walmart U.S. comparable sales by about 125 basis points this year.

    Tone shiftQ3 FY2026 → Q2 FY2027