By all appearances, Walmart (WMT +0.10%) generally reported decent results for its fiscal 2027 second-quarter earnings on Aug. 20. But by the end of the day, the stock had slumped more than 9%.
That may be an overreaction in the short term, however, as history has shown that Walmart has been able to navigate through difficult terrain.
Image source: The Motley Fool.
What happened in the quarter
For the second quarter of its fiscal 2027, Walmart reported that revenue climbed by 5.9%, with a 23% surge in global e-commerce revenue. In addition, Walmart also raised its net sales forecast for the year, expecting an increase of 4% to 5%, up from a previous forecast of 3.5% to 4.5%. The retailer also projects adjusted earnings will fall in the range of $2.80 to $2.97 per share, up from previous expectations of $2.75 to $2.85.
Walmart also shared with CNBC that it will receive about $2.9 billion in tariff refunds and plans to use the funds to lower prices for shoppers.
That said, the stock still declined by 9% on the day. What seemed to worry investors was that U.S. comparable sales grew by only 2.6%, which was less than the 3.5% expected by analysts, according to FactSet data shared by CNBC. Other issues were that net income dipped from $7 billion in the prior-year period to $6.3 billion for the second quarter of 2027, and Walmart also expects to incur more than $2 billion in costs related to higher fuel prices.
Today’s Change
(0.10%) $0.11
Current Price
$103.70
Key Data Points
Market Cap
Day’s Range
$102.15 – $104.28
52wk Range
$95.42 – $135.16
Volume
44.5M
Avg Vol
24.7M
Gross Margin
26.75%
Dividend Yield
0.94%
Is Walmart stock a buy?
Walmart certainly has challenges to overcome, but it still has two big investing appeals: its Dividend King status and its newer revenue generators. It won’t be a massive income source for anyone who buys shares, as the dividend yield is only 0.9%. That said, it’s more about what that Dividend King title means than the payout itself.
Walmart has increased its dividend payout for 53 consecutive years. That means it increased its payouts during stagflation and inflation. It also means it increased dividend payouts during the 2008 financial crisis and the COVID-19 pandemic. Because some companies lacked financial strength during periods of tough economic conditions, they had to drastically cut or even pause their payouts. In comparison, Walmart never had to do that in the past 53 years and had a strong enough balance sheet to keep boosting dividend payouts.
For its newer revenue generators, Walmart showcased them in this recent quarter. Net additions to its Walmart+ subscription service hit a new high, and global advertising revenue jumped 38%. The retailer is also seeing strong engagement with its artificial intelligent shopping agent, Sparky. The number of customers who used Sparky was up 70% from last year, and those who used Sparky spent 40% more than non-Sparky users.
So while Walmart may presently be facing a bit of a tough stretch, over the long run, the company has shown it knows how to handle uncertainty and has ultimately rewarded long-term investors. Just over the last five years alone, the Walmart stock price has climbed 105% compared to the S&P 500‘s 72% return. For those who plan on holding for the long term, this looks like an appealing time to pick up some shares.
