Walmart (WMT) Stock Is Down 24% From Its Highs: Buying Opportunity or a Warning?

TLDR

• Walmart stock has dropped 24% since its Q1 2026 earnings in May, currently trading at $103.09
• Q2 revenue came in at $187.94 billion, up 5.9% year over year, beating estimates, with EPS of $0.81 vs. $0.74 expected
• Q3 net sales guidance of 3% to 3.75% growth disappointed investors, triggering the stock’s biggest one-day drop since 2022
• The P/E ratio has fallen to 37, near its five-year average, with a dividend yield of 0.95% below the S&P 500 average of 1.04%
• Analysts hold a consensus “Moderate Buy” rating with an average price target of $131.88, though several firms have recently cut their targets

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Walmart stock opened at $103.09 on Friday, down roughly 24% from its 52-week high of $135.15. The drop started after the company reported its Q1 2026 results in May, and the selling has continued since.

Walmart Inc., WMT

The stock is now trading below both its 50-day moving average of $111.90 and its 200-day moving average of $120.45. Its market cap sits at around $820 billion.

Q2 earnings were not the problem. Walmart reported EPS of $0.81, beating the $0.74 consensus estimate. Revenue of $187.94 billion also came in ahead of the $186.64 billion expected, up 5.9% year over year.

The issue was guidance. Walmart projected net sales growth of just 3% to 3.75% for Q3. That was well below the 6.6% revenue growth posted in the first half of fiscal 2027.

That guidance miss triggered the stock’s worst single-day drop since 2022. Investors had been paying a premium for above-average growth, and that growth appears to be slowing.

Valuation Under the Microscope

The P/E ratio peaked at 49 earlier this year. It has since fallen to 37, which is close to Walmart’s five-year average. That does not make it cheap. The ratio has dropped below 30 more than once over the past five years.

The dividend yield of 0.95% is also below the S&P 500 average of 1.04%, which reduces appeal for income-focused investors. Walmart has raised its dividend for 53 consecutive years, earning Dividend King status, but yield alone is not drawing buyers at these levels.

Net income for the first two quarters of fiscal 2026 came in at $11.7 billion, up just 2% year over year. A change in the fair value of equity investments weighed on that number.

Institutional Activity and Analyst Targets

Institutional investors and hedge funds collectively own 26.76% of Walmart. Pure Financial Advisors bought a new position worth $8.1 million in Q2. State Street, Geode Capital, and Bank of America all added to or initiated positions in recent quarters.

On the insider side, EVP Daniel Danker sold 50,644 shares at $105.35 on August 26th, worth around $5.3 million. The sale was made under a pre-arranged Rule 10b5-1 plan to cover tax obligations on vested equity awards.

Analysts have trimmed targets recently. JPMorgan cut its target from $137 to $125 but kept an “overweight” rating. Telsey dropped its target from $140 to $130 while maintaining “outperform.” Raymond James and KeyCorp also kept positive ratings.

The consensus remains “Moderate Buy” with an average price target of $131.88. Walmart has set Q3 2027 EPS guidance at $0.62 to $0.64, and full-year fiscal 2027 guidance at $2.80 to $2.87 EPS.

E-commerce grew 23% and advertising revenue jumped 38% in Q2, showing the higher-margin parts of the business are still performing.