Walmart (WMT) posted strong Q2 Fiscal Year 2026 results, reporting revenue of $177.4 billion and a 4.6% rise in U.S. comparable sales. The company's net margin expanded to 3.96%, and management increased its full-year outlook for both net sales and adjusted EPS. Following these robust figures, Tigress Financial raised its price target for WMT to $125, citing a bullish outlook despite the stock's elevated valuation.

Walmart Inc. (NYSE: WMT) demonstrated robust performance in its fiscal Second Quarter 2026, exceeding market expectations and prompting Tigress Financial to reaffirm its Buy rating and increase its price target. The retail giant's results, driven by strong sales across key segments and enhanced operational efficiency, contributed to a positive outlook for the company's future trajectory.

The Event in Detail

Walmart reported Q2 FY26 revenue of $177.4 billion, representing a 4.76% increase. U.S. comparable sales advanced 4.6% year-over-year, significantly propelled by strong performance in its grocery and health & wellness categories. The company also showcased improved profitability, with its net margin expanding to 3.96% in the quarter, a figure notably higher than the average for discount retailers in the U.S., which typically hovers below 3%.

Reflecting this strong quarter and confidence in future performance, Walmart's management raised its full-year outlook for net sales to a range of 3.75%-4.75% and adjusted earnings per share (EPS) to $2.52-$2.62. This revised EPS outlook compares favorably to the $2.51 reported for Fiscal Year 2025.

Following these results, Tigress Financial increased its 12-month price target for WMT from $120 to $125. Based on Walmart's trading price of $98.79 as of September 3, this new target implies an upside potential of 26.5%.

Analysis of Market Reaction

The market's positive reaction to Walmart's Q2 results underscores investor confidence in the company's strategic resilience and operational agility amidst an evolving retail landscape. The strong performance in grocery and health & wellness highlights the consumer's prioritization of essential goods, a segment where Walmart holds a dominant position.

The substantial growth in Global eCommerce sales (25%), along with a 46% increase in its Global advertising business (including Walmart Connect U.S. up 31%), demonstrates the effectiveness of Walmart's omnichannel strategy and its diversification into high-margin revenue streams.

Walmart's ability to expand its net margin to 3.96% indicates effective cost management and operational efficiency, especially when compared to the industry average. While a competitor like Target reported a decline in in-store comparable sales, Walmart's robust figures, including a 26% surge in U.S. e-commerce sales, illustrate its success in capturing market share through strategic investments in digital capabilities and supply chain innovations.

Despite the positive momentum, the stock's forward Price-to-Earnings (P/E) ratio of 36.67x is considered elevated. This "frothier" valuation suggests that much of the company's future growth potential may already be priced into the stock, implying a higher expectation for continued robust performance.

Broader Context & Implications

Walmart's strong performance reinforces its market leadership in the discount retail sector, particularly given its ability to navigate economic uncertainties, including the absorption of tariff costs to maintain competitive pricing. The company's strategic investments in AI-driven supply chain and delivery innovations, such as achieving 33% of orders in under three hours, are positioning it for sustained efficiency and customer satisfaction.

However, the company faces ongoing challenges that could impact future margins. Liability claims resulted in a $450 million drag in Q2, contributing to a year-to-date impact of $730 million, and claims inflation is expected to persist. Furthermore, tariffs and an unfavorable merchandise mix continue to exert pressure on profitability.

Analysts project Walmart's net sales and reported EPS to grow at a CAGR of 5% and 10% respectively from fiscal 2025 to 2028. This growth is anticipated to be driven by initiatives such as "Store of the Future" upgrades, expansion of its advertising arm (Walmart Connect), warehouse automation, and AI-driven e-commerce advancements.

Looking Ahead

Investors will be closely monitoring Walmart's ability to sustain its sales momentum while simultaneously improving its profitability, particularly as margin recovery emerges as a key focus. The success of its strategic investments in technology and automation, alongside its continued management of operational costs and external pressures like tariffs, will be crucial in justifying its premium valuation. The company's resilience in adapting to changing consumer behaviors and its capacity to leverage its vast physical and digital footprint will be pivotal in maintaining its market dominance in the coming quarters.