Walmart's good results did not satisfy the market

Walmart (WMT.US) released its results for the second quarter of 2025. Investors were left somewhat disappointed. The growth rate is underwhelming, valuation metrics are very high, and external risks to the company are mounting. The stock has dropped over 4%.

• EPS: 0.68 vs. expected 0.73

• Revenue: $177.4 billion vs. expected $175.9 billion

• Sales growth: 4.8% vs. expected 4.21%

• Gross margin: increased to 22.8% vs. expected 24.8%

• Raised full-year sales growth guidance: from 3–4% to 3.75–4.75%

• Operating costs: up 8% year-over-year

• E-commerce sales: up 26%

The company’s Price-to-Earnings (P/E) ratio is currently near all-time highs at around 38, which is significantly above the industry standard.

Start investing today or test a free demo

Create account Try a demo Download mobile app Download mobile app

The Federal Reserve’s policy of maintaining interest rates and additional tariffs pushed by the new presidential administration pose serious threats to the company’s condition in the coming quarters.

Treasury Secretary Scott Bessent stated that “Walmart will be able to absorb some of the costs related to tariffs.” Naturally, this may raise concerns among stakeholders who are more interested in the company’s profits than in supporting the U.S. president’s policies. CEO Doug McMillon announced that despite Walmart’s efforts to avoid price increases, they are inevitable.

 

Chart outlook

Walmart’s shares are falling today after the quarterly results and are approaching the 100-day exponential moving average (gold line). Breaking this level could push the price down to around $96–97 per share. Despite solid sales, higher operating costs have reduced the company’s profitability, which did not sit well with investors, leading to selling pressure.
Source: xStation5

Walmart’s scale works in its favor. It is the largest distributor and employer in the U.S. This scale allows Walmart to absorb costs and negotiate deals impossible for competitors.

The company’s management communicates confidence to investors by raising guidance. However, investors remain cautious, penalizing the stock with a significant decline. The future direction for Walmart will be shaped by the upcoming meeting in Jackson Hole. The Fed’s interest rate policy will likely determine consumer strength in the coming quarters, directly impacting Walmart’s earnings.

The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.