Key Takeaways
- Walmart and Costco stock each climbed 11% over the past month (through Monday’s close), while the S&P 500 gained just 0.6%.
- Walmart’s biggest push came on Oct. 14, when a hot September inflation print sent investors from tech into staples. Deutsche Bank upgraded the stock to Buy the next morning.
- The business hasn’t kept pace: Walmart still guides for only 2% to 4% growth in third-quarter adjusted operating income, and its capex keeps beating estimates.
- At 39.5x forward earnings against a 33.9x three-year average, the good news looks priced in. November’s U.S. comp excluding health and wellness is the number to watch.
Walmart (WMT) stock is up 11% over the past month (through Monday’s close), and Costco (COST) matched it at 11%. Over the same stretch, the S&P 500 managed 0.6%, and the Nasdaq 100 slipped 0.4%.
The timing is what stands out. Walmart was sliding into the end of September and hit $104 on Sept. 30. The entire gain came in October, a 14% climb off that low.
How Inflation Sent Investors Into Walmart
The first leg had no single catalyst. Walmart rose 7% from Sept. 30 to Oct. 9, and it did that through a Wall Street Journal report on its costly struggle with warehouse robots.
Then came Wednesday, Oct. 14. September inflation came in hot at 3.7%, and investors rotated out of tech and into the stores that sell everyday necessities. Walmart gained 3.5% that day and Costco nearly 3%, while the S&P 500 fell about 1%.
Deutsche Bank’s Krisztina Katai added fuel the next morning, upgrading Walmart to Buy and raising her price target to $136 from $113. Her case is that inflation sends shoppers hunting for value, which plays straight to Walmart, and that investors are starting to look past its soft 2.6% U.S. comp in the second quarter. She also expects ads, marketplace and membership to lift margins (last quarter, advertising grew 38%, U.S. marketplace sales 52% and membership fees 17%).
Walmart stock tacked on another 1.5% that day.
The Numbers Haven’t Caught Up
Walmart hasn’t touched its guidance since August. It still expects third-quarter adjusted operating income to grow just 2% to 4% in constant currency, because it’s putting much of its $2.9 billion tariff refund back into lower prices. It also expects more than $2 billion in extra fuel costs this year, and according to Deutsche Bank, Walmart sees today’s diesel prices wiping out the whole refund by the end of 2027.
The spending isn’t slowing down either. Walmart put $26.6 billion into capex in the year ended January 2026, and analysts expect about $29 billion this fiscal year. Its capex has topped the Street’s estimate in each of the last five reported quarters. And on Monday, Walmart priced $3 billion of U.S. bonds and launched its first Canadian-dollar offering, a C$5 billion deal, Bloomberg reported.
That’s a lot to ask of a business whose latest operating profit leaned on a $2.9 billion tariff refund (partly offset by price investments).
What 39x Already Prices In for Walmart
On a Sept. 30 episode of the We Study Billionaires podcast, co-host Kyle Grieve said of Walmart that “the stock is priced like a tech business inside of the Magnificent Seven.”
He said that before the 14% bounce.
Walmart now trades at 39.5x forward earnings. Its average is 33.9x over three years and 29.3x over five.
Analysts expect normalized EPS to grow about 11% a year, from $2.64 in the year ended January 2026 to $3.63 in the year ending January 2029. That’s solid growth. At 39.5x, I still think it’s a lot to pay for.
The Street’s mean price target of $127.35 sits 7% above Monday’s close, and it has slipped from nearly $139 in June. So the analysts haven’t chased the run.
Why I’m Holding Walmart, Not Adding
I wouldn’t buy more Walmart at 39x. A hot inflation print can keep money flowing into staples for a while, but sooner or later the business has to earn that multiple. I’d hold what I own, and only trim if the run has made Walmart too big a slice of the portfolio.
The next test is the third-quarter report in November. Walmart guides for net sales growth of 3% to 3.75% in constant currency and adjusted EPS of $0.62 to $0.64. The line I’ll be watching is the U.S. comp excluding health and wellness, which has stayed in a 3% to 4% range for two and a half years. If it holds there, the rollbacks are working. If it slips under 3%, the multiple has a long way to fall.
So what is Walmart stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
