Walmart’s (NYSE: WMT) stock price is set for a big move due to underlying strengths, market positioning, guidance, high potential for positive catalysts, and analysts' sentiment.
The analysts' sentiment trends ahead of the FQ1 2026 earnings report were bullish, leading this market to new highs, and are unlikely to reverse now.
The risk is that analysts may only reaffirm their targets, potentially capping a rally that still has 10% or more left to run.
The critical details are the increasing coverage, firming sentiment, a Buy rating, and steadily increasing price targets that implied a move to the high-end range, a 10% to 20% increase from the pre-release trading levels in mid-May.
Walmart’s Cautious Tone Hints at Positive Surprises Later in the Year
Walmart’s guidance is the only negative aspect of its Q1 release and update, even though it isn’t bad. The company reaffirmed its forecast for 3.5% revenue growth for the year, with strength in the front half and slightly weaker results in the back. The guidance included commentary that consumers may experience higher retail prices before the end of FQ2 due to tariffs, but this is insufficient for execs to alter the outlook.
[content-module:Forecast|NYSE: WMT]Results in Q1 included slower growth but a still stronger-than-expected 2.5% increase driven by digital, U.S. comps, and Sam’s Club.
Segmentally, U.S. Walmart sales grew by 3.2% on a 4.5% comp. International sales were weaker, flat compared to last year, while Sam’s Club grew by 2.9%. Sam’s sales ex-fuel grew by a stronger 5.5%, driven by a 14% increase in membership revenue, a mid-single-digit increase in tickets and a slight decline in check average. The advertising business is also doing well, growing by 50%, including the addition of Vizio and a 31% increase in Walmart Connect in the U.S.
The margin news is also good. The company widened its gross margin and produced a better-than-expected bottom line result. The $0.61 in adjusted EPS is up a penny compared to last year, a slower 1.6% growth pace compared to the 2.5% top line, but fully 500 basis points better than MarketBeat’s reported consensus.
Earnings strength is also seen in operating cash flow, which is up 25%, and free cash flow, which increased by $0.9 billion compared to last year’s negative figure, producing $0.4 billion in positive FCF. As for the guidance, it is slightly weaker than the consensus forecasts but includes growth and an expectation for solid margin, cash flow, and free cash flow.
Walmart’s Capital Return Helps Drive Market Sentiment
[content-module:DividendStats|NYSE: WMT]Walmart’s results and guidance highlight the strength and reliability of its capital return. The capital return includes dividends and share buybacks that reduce the count incrementally on a quarter-to-quarter basis. The dividend is reliable because it is less than 40% of the earnings outlook and backed up by a strong balance sheet.
The company raised some cash via debt in Q1, but not an alarming amount, and favorable rates were cited. The net impact is that the cash balance is relatively flat compared to last year, and debt is slightly higher. Still, other liabilities have decreased, leverage remains low, and equity is rising.
Walmart’s price action following the release was mixed and could result in some near-term volatility. An initial stock price increase was followed by a decline, foreshadowing a potentially mixed market after the open. However, the market remained above critical support levels, aligning with near, mid and long-term trends, and looked poised to rally higher.
The critical support level in mid-May is the 30-day EMA near $94.50; a move below it could take this market down to 490 or lower. The critical resistance target is near $100; a move above it will likely lead to another 10% to 20% upswing.
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