How Should Investors Approach Walmart Stock Post Q1 Earnings?

Core Viewpoint - Walmart Inc. reported stronger-than-expected first-quarter fiscal 2026 results, with year-over-year growth in revenues and earnings, but the market reacted cautiously due to concerns over rising tariffs and their impact on pricing [1][5]. Financial Performance - Total revenues increased by 2.5% year over year to $165.61 billion, while adjusted earnings per share (EPS) reached 61 cents, exceeding the Zacks Consensus Estimate of 57 cents [2]. - The e-commerce segment grew by 22$2.4 billion in the first quarter, with expectations of a 120 basis-point hit to revenue growth in the second quarter due to unfavorable exchange rates [4]. - Walmart refrained from providing EPS guidance for the second quarter due to uncertainties related to tariffs and the economic environment, although it reaffirmed its full-year guidance with expected revenue growth of 3% to 4% at constant currency [5][6]. Market Position and Valuation - Walmart shares have increased by 50.6% over the past year, outperforming the broader Zacks Retail – Wholesale sector's growth of 16.7% and the S&P 500's increase of 11.2% [8]. - The stock is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 35.97, above the industry average of 33.19, indicating a premium valuation supported by strong fundamentals and growth in high-margin areas [14]. Long-term Strategy - Despite short-term challenges, Walmart's growing e-commerce presence, strong value proposition, and expansion into high-margin areas position it well in the retail sector, with robust long-term fundamentals [7][17].