How Should You Play Walmart Stock Ahead of Q1 Earnings Release?

Walmart Inc. WMT is slated to report its first-quarter fiscal 2026 earnings on May 15 before the market opens.The Zacks Consensus Estimate for fiscal first-quarter revenues is pegged at $165.6 billion, indicating 2.5% growth from the year-earlier level. However, the consensus mark for quarterly earnings has moved down a penny in the past seven days to 57 cents per share, indicating a 5% decline from the year-ago quarter’s reported figure. (Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.)Walmart has a trailing four-quarter average earnings surprise of 7.4%. In the last reported quarter, the company’s bottom line surpassed the Zacks Consensus Estimate by a margin of 1.5%.Walmart Inc. Price and EPS Surprise Walmart Inc. price-eps-surprise | Walmart Inc. QuoteWhat the Zacks Model Predicts About WMT’s Q1 EarningsAs investors prepare for Walmart’s fiscal first-quarter announcement, the question looms regarding earnings beat or miss. Our proven model doesn’t conclusively predict an earnings beat is likely for WMT this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.Walmart has an Earnings ESP of -1.76% and carries a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.What’s Shaping Walmart’s Q1 Earnings?Walmart continues to demonstrate the strength of its highly diversified business model, with consistent contributions across segments, markets, channels and formats. The company is seeing increased traffic in both its in-store and digital channels, reflecting its strategic adaptability to the evolving retail environment. Growth is being fueled by expanding e-commerce operations, enhanced pickup options and accelerated delivery services. In addition, Walmart’s newer business ventures — such as its third-party marketplace, advertising initiatives and membership programs — have been contributing to diversified profit streams.Despite these strengths, Walmart acknowledged in April that it is experiencing increased week-to-week sales volatility in the first quarter of fiscal 2026 due to economic uncertainty and weakened consumer sentiment. However, the company expects fiscal first-quarter sales growth of 3% to 4%, with a 100 basis point headwind from the leap year comparison.The company anticipates adjusted operating income growth of 0.5% to 2% at constant currency for the to-be-reported quarter. That said, the range of potential outcomes has broadened backed by a less favorable category mix, increased casualty claims expenses and Walmart's commitment to maintaining pricing flexibility as new tariffs come into effect. Notably, casualty claims represent the largest cost pressure, contributing around $200 million in expense headwinds to operating income growth. For the fiscal first quarter, the company projects adjusted earnings per share between 57 and 58 cents, compared to 60 cents reported in the same period of fiscal 2025.Walmart’s Valuation PictureFrom a valuation standpoint, Walmart stock is currently trading at a premium compared to the Zacks Retail - Supermarkets industry. With a forward 12-month price-to-earnings (P/E) ratio of 36.15, Walmart stands above the industry average of 33.29, suggesting that the stock may be relatively expensive at current levels.Image Source: Zacks Investment ResearchWhen compared to other retail giants, the company’s valuation looks even more stretched. The Kroger Co. KR trades at a forward P/E of 14.81, Target Corporation TGT at 10.60, and Ross Stores, Inc. ROST at 21.69 — all significantly lower than Walmart’s valuation multiple. This raises concerns among value-focused investors, especially given Walmart’s Value Score of C, which implies limited value potential based on current metrics.WMT’s Price PerformanceOver the past three months, Walmart stock has dropped 8% compared with the industry’s decline of 6.8%. In comparison, the S&P 500 has declined by 8.1% during the same period. The company underperformed some key peers, including Kroger, which gained 9.5%, and Ross Stores, which rose 1.3%. However, Target stock dropped 25.1% in the last three months.Image Source: Zacks Investment ResearchWMT’s Stock Analysis: Best Moves for Investors NowWalmart stock benefits from a strong, diversified business model, robust omnichannel strategy and growth in high-margin areas like digital advertising and its third-party marketplace. These strengths position it as a dependable choice for growth and stability-focused investors. However, short-term challenges — including sales volatility, rising operating expenses and a weaker earnings outlook — raise caution. With WMT trading at a premium valuation and limited near-term upside, value investors may find better entry points after the upcoming earnings report.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Target Corporation (TGT): Free Stock Analysis Report Walmart Inc. (WMT): Free Stock Analysis Report The Kroger Co. (KR): Free Stock Analysis Report Ross Stores, Inc. (ROST): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks