Buy, Sell, or Hold Walmart Stock After Q1 Earnings?

Core Viewpoint - Walmart reported Q1 results that exceeded expectations but indicated that rising prices due to tariffs will be passed on to customers [1][3][4] Group 1: Q1 Results - Walmart's Q1 sales increased by 2% to $165.6 billion, slightly above estimates of $165.59 billion [3] - International sales grew nearly 8%, with global e-commerce business expanding by 22% [3] - Q1 EPS was $0.61, surpassing last year's $0.60 and exceeding expectations of $0.57 by 7% [4] - Walmart has achieved or exceeded the Zacks EPS Consensus for 11 consecutive quarters, with an average earnings surprise of 5.26% in the last four quarters [4] Group 2: Guidance & Outlook - For Q2, Walmart expects sales to increase by 3.5%-4.5%, aligning with Zacks' estimate of $174.71 billion or 3% growth [8] - Walmart withheld Q2 EPS guidance due to uncertainties surrounding tariffs [8] - The company maintained its full-year sales growth forecast of 3%-4% and adjusted EPS between $2.50-$2.60 [9] - Walmart's CFO noted that the company typically gains market share during economic uncertainty [9] Group 3: Valuation Comparison - Walmart is trading at a P/E of 37.3X, significantly higher than Target's 10.6X and the Zacks Retail-Supermarkets Industry average of 14.2X [10] - Despite the high P/E, Walmart's price-to-sales ratio is less than 2X, indicating some valuation support [10] Group 4: Investment Outlook - Following the Q1 report, Walmart stock holds a Zacks Rank 3 (Hold) and is considered a viable long-term investment [12] - The potential for upside or downside risk may depend on earnings estimate revisions in response to the impact of higher prices on the retailer's outlook [12]