Should you buy Walmart stock after its 9% post-earnings drop?

Walmart shares tumbled more than 9% on Thursday after the retailer reported weaker-than-expected US comparable sales, raising questions over whether the selloff has created an attractive entry point for investors even as debate over the stock's valuation continues.

The selloff came despite Walmart beating Wall Street estimates for both revenue and adjusted earnings and raising its full-year financial forecasts.

Walmart reported quarterly revenue of $187.9 billion, up nearly 6% from a year earlier and above the roughly $186 billion expected by analysts, according to Bloomberg consensus data.

Adjusted earnings per share came in at 81 cents, compared with expectations of 74 cents.

But investors focused on the company's US comparable sales, which rose 2.6%, well below the 3.8% increase expected by analysts, according to LSEG data.

The company's health and wellness business was a major drag.

Comparable sales in the category declined in the low single digits, with Walmart estimating a roughly 900-basis-point impact from maximum fair price provisions under the Inflation Reduction Act.

Excluding health and wellness, however, core merchandise comparable sales increased 3.4%.

That distinction is important for investors trying to determine whether the quarter represents a fundamental deterioration in Walmart's business or a temporary hit from pharmacy-related factors.

The stock closed at $103.84, down about 8% this year, prompting investors to reassess whether the sharp pullback represents a buying opportunity.

For several analysts, the answer remains yes.

Full-year guidance remains positive

Walmart did not respond to the weaker quarterly sales number by cutting its outlook. Instead, it raised its full-year forecast.

The company now expects fiscal 2027 net sales to increase 4% to 5%, compared with its previous forecast of 3.5% to 4.5%.

Adjusted EPS is expected to reach $2.80 to $2.87, up from the previous range of $2.75 to $2.85.

However, Walmart's third-quarter outlook was more cautious.

The company expects adjusted EPS of 62 cents to 64 cents, below analysts' estimate of 68 cents.

Third-quarter net sales are expected to increase between 3% and 3.75%, also below Wall Street's forecast of 4.9%.

Nevertheless, the resilience has encouraged some analysts to view Thursday's decline as an opportunity rather than the beginning of a larger downtrend.

"While we acknowledge the US comp number may hold shares back today, we remain encouraged by WMT's ability to gain share and grow profits faster than sales," TD Cowen analyst Oliver Chen wrote in a research note.

Jefferies analysts led by Corey Tarlowe similarly argued that Walmart continues to operate "from a position of strength."

"Underlying trends remain supported by transaction growth, broad-based share gains and continued strength across e-commerce, advertising, marketplace and membership," the Jefferies analysts said.

What do analysts think about the dip?

BofA Securities lowered its Walmart price target to $126 from $144 but retained a Buy rating.

The bank acknowledged that the slowdown in US comparable sales was disappointing and said the stock's reaction was amplified by Walmart's premium valuation.

At the same time, BofA said the results contained positive signals beneath the headline numbers and argued that Walmart remains a secular market-share gainer.

With the stock now trading at a price-to-earnings ratio of about 36.3, valuation remains the biggest argument against simply buying the dip.

BofA's revised $126 target still implies meaningful upside from Thursday's close.

It views the pullback in shares as a compelling opportunity to own a secular share gainer.

Goldman Sachs also reduced its price target, to $130 from $141, while retaining a Buy rating.

Analyst Kate McShane said the firm was encouraged by Walmart's stronger second-half outlook, supported by price investments and marketplace growth.

Walmart's US e-commerce operation also delivered double-digit incremental margins during the first half of the year.

Goldman believes Walmart's guidance contains some conservatism because of macroeconomic uncertainty and expects the retailer to continue benefiting from market-share gains.

E-commerce and advertising strengthen the bull case

The investment case for Walmart increasingly extends beyond its physical stores.

The retailer has been expanding its e-commerce, advertising and marketplace operations, creating additional sources of revenue and profitability.

Jefferies maintained its Buy rating, pointing to transaction growth and gains across e-commerce, advertising and membership.

RBC Capital Markets analyst Steven Shemesh also remained positive, highlighting nearly 10% operating-profit growth excluding tariff refunds.

Evercore ISI retained an Outperform rating, citing sales growth near the top end of Walmart's guidance and the company's decision to raise its full-year sales forecast.

UBS analyst Michael Lasser, meanwhile, said the results could intensify the debate over Walmart's valuation but maintained a bullish stance.

The conflicting signals leave investors with two distinct ways to view Thursday's selloff.

So, should investors buy Walmart stock?

The case for buying Walmart after the decline rests on the company's underlying market-share gains, stronger e-commerce economics and its ability to raise full-year guidance despite a disappointing US comparable-sales figure.

The bearish argument is valuation.

At roughly 36 times earnings, Walmart remains expensive compared with many traditional retailers.

That means the company needs to continue delivering strong growth and improving profitability to justify the premium.

Thursday's selloff has reduced that valuation premium, but it has not eliminated it.

For long-term investors, the decline therefore looks more like a potential entry point than an obvious bargain.

The raised full-year guidance and continued strength in e-commerce, advertising and marketplace operations support the bullish case, while weaker US comparable sales and pharmacy headwinds provide reasons for caution.

The most important question over the coming quarters will be whether Walmart can turn its market-share gains into sustained earnings growth without relying heavily on temporary benefits such as tariff refunds.

For now, the analyst consensus remains tilted toward the buy side.

But after the sharp decline, investors may want to see evidence that underlying US sales momentum is stabilizing before treating Walmart's shares as a clear-cut bargain.