After Earnings Miss, Walmart Is Still a Top Consumer Staples Play

Core Viewpoint - Walmart remains a dominant player in the consumer staples sector despite recent competition from Amazon and a slight earnings miss, with strong growth in key metrics indicating a positive outlook for the company [2][3][12]. Financial Performance - In fiscal 2026 Q2, Walmart reported revenues of approximately $177 billion, reflecting a growth rate of 4.8%, with a constant currency growth rate of 5.6% [3][6]. - The company missed adjusted earnings per share (EPS) expectations, reporting 68 cents, which was 6 cents lower than anticipated, leading to a 4.5% drop in shares post-earnings release [4][5]. - Walmart has increased its full fiscal year adjusted EPS guidance to $2.57, up from $2.55, and expects constant currency net sales growth between 3.75% and 4.75% for the full year [6][7]. Growth Drivers - U.S. comparable sales growth was reported at 4.6%, an increase from 4.2% a year ago, while U.S. eCommerce sales surged by 26%, up from 22% in the previous quarter [8]. - The global advertising business grew by 46%, and membership fees from Walmart+ service increased by 15%, highlighting the importance of these higher-margin revenue sources [8][9]. Competitive Landscape - Amazon is intensifying competition, having achieved over $100 billion in U.S. grocery sales in the prior year, excluding Whole Foods and Amazon Fresh, and has introduced same-day delivery for perishables [10][11]. - Despite Amazon's efforts, Walmart continues to gain market share, although the effectiveness of Amazon's new offerings will need to be monitored closely [11][13]. Market Outlook - Walmart's forward price-to-earnings (P/E) ratio is around 37x, driven by the strong growth of its emerging higher-margin revenue streams [12]. - Analysts maintain a positive outlook on Walmart, with a 12-month stock price forecast of $109.89, indicating a potential upside of 12.24% from the current price [2].