Walmart Earnings: Digital Fulfillment Options and Attractive Prices Drive Market Share Wins

Key Morningstar Metrics for Walmart

• Fair Value Estimate: $56.00
• Morningstar Rating: 1 star
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium

What We Thought of Walmart’s Earnings

We plan to raise our fair value estimate of $56 per share for Walmart WMT by a low-to-mid-single-digit percentage following the firm’s solid third-quarter earnings release, which featured further market share wins at its namesake banner and Sam’s Club. Growth in alternative profit streams, such as membership fees and advertising, also contributed favorably to the bottom line, as the retail behemoth saw adjusted EPS expand 14% annually to $0.58 (outpacing our $0.54 forecast).

While we acknowledge that Walmart’s attractive price points and burgeoning online presence should translate into continued growth on the top and bottom lines for years to come, we think shares look very overvalued, trading at more than 30 times our forecast for fiscal 2026 adjusted EPS.

Comparable sales at Walmart US expanded 5% (outpacing our 4% forecast) amid healthy growth in both transaction count and average ticket. We view the top-line performance as particularly impressive, considering product inflation was negligible and the segment lapped a robust 5% gain from the prior year. Consistent with previous quarters, growth was primarily driven by market share wins across high-frequency categories such as grocery and health and wellness.

However, we were pleased to see sales in general merchandise inflect positively as consumers responded favorably to price deflation across the category. Walmart US’ operating margin improved 10 basis points to 4.7% as continued improvement in e-commerce fulfillment and membership income offset elevated marketing and weather-related expenses.

Performance at Sam’s Club continued to impress, as comparable sales expanded by 7% amid a strong uptick in transactions. Notably, an increase in membership signups and premium tier penetration yielded a robust 15% increase in membership fee income. With the warehouse club channel continuing to grow in popularity, we think Sam’s is well positioned to grow comp sales at a 4%-5% pace over the next few years.