WMT Earnings Preview: All 7 Risks Below 21% at 45x P/E

The Core Question

Walmart's operational transformation is genuine — DOMINANT moat, DURABLE revenue, EXCEEDING execution — but at 45.7x trailing P/E, the stock requires 9-11% EPS CAGR while management guides 7-10%. Does Q4 FY2026 close the gap, or confirm the market is paying a premium for outcomes not yet delivered?

For our five-lens committee analysis covering moat durability, revenue quality, narrative gaps, unit economics, and tail risk, read the deep dive here.

Ensemble Forecast

Key Market

FY27 Guidance Miss

Probability

18%

Model Agreement

0.94

Strong consensus

Our nine-model ensemble assigns below-21% probability to every downside scenario across all seven active markets — guidance miss (18%), higher-income customer trade-up (19%), GLP-1 grocery headwind (21%), Walmart Connect deceleration (16%), eCommerce profitability reversal (12%), SNAP benefit cuts (20%), and FTC retail media inquiry (10%). Model agreement ranges from 0.94 to 0.96 across all markets. See all seven markets on the WMT forecasting page.

Earnings Scorecard — February 19

FY2027 EPS Guidance

Bull: >$2.70Bear: <$2.55

The most diagnostic market in the set. At 45.7x P/E, the stock requires 9-11% EPS CAGR vs. management's 7-10% guide. Ensemble assigns 82% probability guidance is maintained or raised — but the market has already priced that in.

Walmart Connect Organic Growth

Bull: >25%Bear: <20%

The tech-ecosystem narrative hinge. Advertising plus membership contribute 25-30% of GAAP operating income on less than 2% of revenue — growth rates matter more than absolute levels. Ensemble assigns 84% probability growth stays above 20%.

eCommerce Profitability

Bull: Margin expansionBear: Loss reversion

Strongest ensemble consensus: 88% probability profitability sustains with 0.95 model agreement. Global eCommerce crossed profitability in Q1 FY26 with 11% US incremental margins, but absolute margins remain undisclosed.

Higher-Income Customer Retention

Bull: Gains continueBear: Trade-back-up

Highest model agreement in the set (0.96) but flagged by three separate lenses as untested through economic recovery. Only one year of data on upper-income household gains. Transaction growth below 2% would be the earliest signal of the Narrative Unraveling scenario.

Tariff and Cost Absorption

Bull: Guidance maintainedBear: Margin pressure cited

Management raised FY26 guidance twice while absorbing tariffs, $730M in claims expense, and 150bps of VIZIO dilution. More than two-thirds of US products are domestically sourced. A margin compression call-out would be the first sign of execution fatigue.

Current Assessment

Walmart is classified as “Price Above Value” at medium confidence. The operating quality is exceptional — DOMINANT moat (E3), DURABLE revenue (E3), EXCEEDING execution (E3), PROVEN unit economics (E2) — but at 45.7x trailing P/E, the market requires outcomes at the upper end of management guidance. The ensemble confirms the operational thesis but reveals limited margin of safety. Read the full thesis assessment. We will update within 24 hours of the February 19 earnings release.

Full five-lens analysis with moat mapping, revenue durability, narrative gap assessment, and all seven active prediction markets

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