◆ What the Market Isn't Pricing In

Walmart (WMT) — the variant view

Walmart converted a court's money into permanent share, and no line in the accounts can show it.

📈 WMT valuation, revenue & earnings — P/E, P/S, revenue, EPS →

The most consequential thing Walmart did in the last year does not appear in its results, because it was deliberately spent before it could.

Where fiscal 2026 growth came from ($bn)+$31.9bnNet sales increase+$29.5bnGlobal eCommerceincrease$6.4bnAdvertising revenue$2.9bnTariff refunds, one quarterAbout 92% of the year's sales growth was digital, fulfilled largely from existing stores.
Ninety-two per cent of the growth happened online, in a channel that was a loss-maker five years ago and now improves the margin. The refund went into prices, where no line records it.

In the June 2026 quarter the company received approximately $2.9 billion of tariff refunds from Customs and Border Protection after the Supreme Court struck down the duties collected under the International Emergency Economic Powers Act1. Reported operating income rose 28.8%. Adjusted for currency and for the refund, it rose 17.4% — because Walmart had put much of the money into lower prices and said the remaining refunds would go the same way2.

Most readings of that treat the gap between 28.8% and 17.4% as the quality of the quarter: a windfall, properly stripped out, leaving a good but ordinary result. That is the wrong way round. The refund was real money and Walmart converted it into price, which converts into share — and share taken with somebody else's money, from rivals who import less and therefore received far less back, does not reverse when the windfall ends. Nothing in the income statement records that. It shows up in the comparable sales of grocers and discounters two and three quarters later.

The second under-priced fact is what the digital business has become. Net sales grew $31,875 million in fiscal 2026 and global eCommerce grew about $29,500 million of it3 — roughly ninety-two per cent of the growth, from a channel that was a loss-maker five years ago and whose economics management now names as a driver of Walmart U.S. margin expansion4. Almost all of it is fulfilled from stores that were paid for decades ago. Walmart is not building an eCommerce business; it is monetising an estate it already owns, at incremental cost.

The third is the one the market has clearly noticed and may still be under-counting: advertising of roughly $6.4 billion growing 46%5, membership fees growing 17%, marketplace growing 52%6 — about one per cent of revenue producing something like a fifth of the operating profit, at close to no incremental cost.

Set against that: general merchandise has not grown in three years, return on capital is fractionally below where it was in 2015, and the shares are at 38 times earnings7. The bull case is not that Walmart is cheap. It is that the composition of its profit is changing faster than its multiple assumes, and that the company has just demonstrated it will spend any windfall on making that change permanent.

References
  1. ReportedIn the June 2026 quarter the company received approximately $2.9 billion of tariff refunds from Customs and Border Protection after the Supreme Court struck down the duties collected under the International Emergency Economic Powers Act.
    Skadden, Arps - The Supreme Court Ends IEEPA Tariffs: the February 2026 decision holding tariffs collected under the International Emergency Economic Powers Act unlawful, and the refund process for importers, with aggregate refunds estimated at more than $160 billion — February 2026 · publ. February 2026 · source ↗
  2. ReportedAdjusted for currency and for the refund, it rose 17.4% — because Walmart had put much of the money into lower prices and said the remaining refunds would go the same way.
    Walmart second-quarter fiscal 2027 earnings release (Form 8-K exhibit 99.1) - revenue $187.9 billion +5.9% and +5.1% in constant currency; operating income +28.8% and +17.4% adjusted in constant currency; global eCommerce +23%; global advertising +38% with Walmart Connect excluding VIZIO +43%; membership fee revenue +17%; gross profit rate +96 basis points and Walmart U.S. +158; Walmart U.S. comp sales +2.6% and operating income +20.6% with operating expenses deleveraged 72 basis points; Sam's Club operating income +44.3% and International +16.6%; ROA 8.0% and ROI 15.4%; free cash flow $5.5 billion; 42.3 million shares repurchased for $5.1 billion year to date; FY27 guidance of 4.0-5.0% net sales growth, 7.0-8.5% adjusted operating income growth and $2.80-$2.87 adjusted EPS — Q2 FY2027 · publ. August 20, 2026 · source ↗
  3. Moat Explorer calcNet sales grew $31,875 million in fiscal 2026 and global eCommerce grew about $29,500 million of it — roughly ninety-two per cent of the growth, from a channel that was a loss-maker five years ago and whose economics management now names as a driver of Walmart U.S. margin expansion.
    Moat Explorer calculation from figures in Walmart's own filings: global eCommerce of about $150.4 billion (Walmart U.S. $99.6B + International $35.8B + Sam's Club $15.0B) against $120.9 billion, a $29.5 billion increase against a $31,875M rise in net sales ($706,413M against $674,538M), about 92%; Walmart U.S. selling floor of 698.7 million square feet (633,724 + 36,609 + 28,375 thousand) and net sales per store of $104.7 million ($482,975M over 4,611 stores); operating margin 4.18% ($29,825M/$713,163M) against 4.31% ($27,012M/$648,125M); net margin 3.07%; gross profit rate 24.2% ($171,018M/$706,413M); grocery 59.1% of Walmart U.S. net sales ($285,482M/$482,975M) against 59.8% ($264,210M/$441,817M) and grocery growth of 3.4%; general merchandise to grocery ratio 0.40 against 0.43; health and wellness +26.7% ($54,898M to $69,547M); payables less inventories $4,210M ($63,061M less $58,851M); rent 0.34% of revenue ($2,434M/$713,163M); capital expenditure 64% of operating cash flow ($26,642M/$41,565M); a 1% overrun on $147,943M of expense is $1,479M; eCommerce penetration 27.5% international ($35.8B/$130,423M) and 20.6% at Walmart U.S. ($99.6B/$482,975M); shareholder returns $15,587M ($7,507M dividends plus $8,080M repurchases) against $14,923M of free cash flow; Q2 FY2027 net income attributable down 9.4% ($6,366M against $7,026M); Walmart U.S. comparable sales of about 3.9% excluding the 125 basis point pharmacy headwind — FY2024-Q2 FY2027 · publ. September 2026 · source ↗
  4. ReportedNet sales grew $31,875 million in fiscal 2026 and global eCommerce grew about $29,500 million of it — roughly ninety-two per cent of the growth, from a channel that was a loss-maker five years ago and whose economics management now names as a driver of Walmart U.S. margin expansion.
    Walmart second-quarter fiscal 2027 earnings release (Form 8-K exhibit 99.1) - revenue $187.9 billion +5.9% and +5.1% in constant currency; operating income +28.8% and +17.4% adjusted in constant currency; global eCommerce +23%; global advertising +38% with Walmart Connect excluding VIZIO +43%; membership fee revenue +17%; gross profit rate +96 basis points and Walmart U.S. +158; Walmart U.S. comp sales +2.6% and operating income +20.6% with operating expenses deleveraged 72 basis points; Sam's Club operating income +44.3% and International +16.6%; ROA 8.0% and ROI 15.4%; free cash flow $5.5 billion; 42.3 million shares repurchased for $5.1 billion year to date; FY27 guidance of 4.0-5.0% net sales growth, 7.0-8.5% adjusted operating income growth and $2.80-$2.87 adjusted EPS — Q2 FY2027 · publ. August 20, 2026 · source ↗
  5. ReportedThe third is the one the market has clearly noticed and may still be under-counting: advertising of roughly $6.4 billion growing 46%, membership fees growing 17%, marketplace growing 52% — about one per cent of revenue producing something like a fifth of the operating profit, at close to no incremen
    Marketing Dive - Walmart global advertising revenue of nearly $6.4 billion in fiscal 2026, up 46%, with Walmart Connect U.S. up 41% in the fourth quarter; advertising and membership fees accounted for about a third of fourth-quarter operating income — FY2026 · publ. 2026 · source ↗
  6. ReportedThe third is the one the market has clearly noticed and may still be under-counting: advertising of roughly $6.4 billion growing 46%, membership fees growing 17%, marketplace growing 52% — about one per cent of revenue producing something like a fifth of the operating profit, at close to no incremen
    Walmart second-quarter fiscal 2027 earnings release (Form 8-K exhibit 99.1) - revenue $187.9 billion +5.9% and +5.1% in constant currency; operating income +28.8% and +17.4% adjusted in constant currency; global eCommerce +23%; global advertising +38% with Walmart Connect excluding VIZIO +43%; membership fee revenue +17%; gross profit rate +96 basis points and Walmart U.S. +158; Walmart U.S. comp sales +2.6% and operating income +20.6% with operating expenses deleveraged 72 basis points; Sam's Club operating income +44.3% and International +16.6%; ROA 8.0% and ROI 15.4%; free cash flow $5.5 billion; 42.3 million shares repurchased for $5.1 billion year to date; FY27 guidance of 4.0-5.0% net sales growth, 7.0-8.5% adjusted operating income growth and $2.80-$2.87 adjusted EPS — Q2 FY2027 · publ. August 20, 2026 · source ↗
  7. ReportedSet against that: general merchandise has not grown in three years, return on capital is fractionally below where it was in 2015, and the shares are at 38 times earnings.
    Market data (stockanalysis.com) - $105.73 a share, ~$838.8B market cap, ~38x trailing and ~35x forward earnings, ~1.14x sales, 0.94% dividend yield, 52-week range $98.88-$135.16; fiscal-year-end market capitalisations back to fiscal 2016 — September 10, 2026 · publ. 2026 · source ↗
Sources
Generated September 22, 2026