Walmart Earnings Preview: Why a Beat Hasn't Meant a Stock Pop

The last, and largest, retail report of the week

Walmart (NYSE: WMT) reports fiscal second-quarter 2027 results before the market opens on Thursday, August 20, 2026, closing out a week of closely watched big-box retail earnings that already included Home Depot on Tuesday and Target on Wednesday.

As the largest U.S. retailer, Walmart is a widely used proxy for how the broader consumer is holding up, so its report carries outsized weight — especially after the Commerce Department reported that U.S. retail sales fell in July 2026 for the first time in nine months.

Wall Street's consensus — the average of analyst forecasts — heading into the report is adjusted EPS (earnings per share, adjusted to strip out one-time items) of about $0.74, on revenue of roughly $186.7 billion. That would land at the top of the guidance range Walmart itself gave for this quarter — $0.72 to $0.74 in adjusted EPS, a company's own forecast — when it reported its prior quarter back in May.

What the options market is pricing in

Ahead of the report, options pricing implied an earnings-day move of roughly 4.6% in either direction — equivalent to about $42 billion in market value shifting on Walmart's roughly $920 billion market capitalization. That's a meaningful move for a company of Walmart's size, reflecting real uncertainty about which way a stock near multi-year highs will go once the numbers are out.

An implied move like this is the options market's estimate of a likely range, built from current options prices — not a prediction of direction. It says traders expect a bigger-than-typical swing; it says nothing about whether that swing will be up or down.

Why Walmart's own recent history is the real lesson here

Walmart's last two earnings reports both ended in a stock decline, for very different reasons, and together they're a useful case study in why the beat-or-miss headline doesn't tell the whole story.

In its report a year ago, covering the quarter that ended in late July 2025, Walmart missed earnings expectations for the first time since May 2022, reporting adjusted EPS of $0.68 against a consensus of $0.74. Revenue that quarter actually beat estimates. Shares fell roughly 4.3% that day, according to an Associated Press market wrap, largely on the earnings miss.

Then, in its most recent report this past May, covering the quarter that ended in late April 2026, Walmart topped revenue estimates while earnings matched consensus: adjusted EPS came in at $0.66, in line with expectations, while revenue reached $177.75 billion, up more than 7% year-over-year. E-commerce sales rose 26% and Walmart's advertising business grew 36%.

Despite that solid quarter, shares fell more than 7% that day — not because the quarter itself was weak, but because guidance for the following quarter (the one Walmart reports Thursday) came in slightly below what analysts had modeled, rising fuel costs were pressuring operating income, and management struck a cautious tone about lower-income shoppers.

Taken together, a miss and an in-line-to-solid quarter produced the same outcome: a lower stock price. What actually moved the stock in both cases wasn't the trailing quarter's raw numbers — it was what those numbers, and the guidance attached to them, implied about the quarter ahead.

Target's report this week reinforces the same point

Target reported its own second-quarter results on Wednesday, and the headline numbers looked strong — but on their own, they didn't tell the whole story either. A large one-time tariff refund made a meaningful contribution to Target's reported earnings beat, and the market's reaction reflected investors sorting out how much of that beat came from the underlying business versus the refund.

Walmart itself has also applied for tariff refunds — roughly $2.4 billion, according to its own May 2026 disclosure — and has said it intends to prioritize using any refunds toward keeping prices lower. That's worth watching for in Thursday's release, as a factor separate from core operating performance.

What it means for options traders

The practical lesson isn't which direction to bet on Walmart Thursday — it's how to think about the risk of betting at all.

Options priced ahead of a scheduled, well-known catalyst like an earnings report already reflect elevated implied volatility (the market's expectation of how much a stock will move, baked into the options price). That means premiums for calls (the right to buy a stock at a set price), puts (the right to sell it), or straddles (buying a call and a put together to bet on a big move in either direction) are all priced for a bigger-than-normal swing. Buying those options outright means paying for that expected volatility upfront. If Walmart's actual move lands inside the priced-in range — or if the direction is right but the move is smaller than expected — a long options position can still lose some or all of its premium.

On the other side, strategies that sell options premium into this kind of setup — such as cash-secured puts (selling a put while setting aside the cash to buy the shares if assigned) or covered calls (selling a call against stock you already own) — collect income upfront in exchange for taking on the risk of a move larger than what the market priced in.

That risk isn't symmetric with what an option buyer faces. A cash-secured put seller can be forced to buy the stock at the strike price (the price set in the option contract) even if the stock has fallen sharply below that level — locking in a loss on shares bought above the market price. A covered call seller, meanwhile, keeps full downside exposure on the stock already owned: a decline is offset only by the premium collected, not eliminated. Upside beyond the strike price is capped, since the shares can be "called away" and sold at that price.

Walmart's own history this year shows that this risk is not hypothetical: both of its last two reports produced stock moves that surprised in one direction or another relative to what the setup going in might have suggested.

The takeaway

Walmart's earnings report Thursday will be read as a bellwether — an early read — for the U.S. consumer, with options pricing in a roughly 4.6% swing. But Walmart's own last two reports (a miss that sent shares down, and a solid quarter that also sent shares down) are the clearer lesson: guidance quality and the makeup of a beat matter more than whether a headline number lands above or below consensus. That's true whether you're reading Walmart's numbers as an investor or pricing options around them as a trader.

Options trading involves substantial risk and is not suitable for all investors. This article is educational commentary on public market events, not personalized investment, trading, or tax advice.