1 Incredible Reason to Buy Walmart (WMT) Stock Before It Reports Earnings on Aug. 20 -- and 1 Reason Not To

Walmart’s dividend yield is ~0.9% and has grown ~6% on average over the past five years, while the stock delivered strong long-run performance (about 17% annual gains over 10 years). Operationally, the last quarter showed revenue up 7.3% and operating income up 5%, with e-commerce revenue rising 26% YoY and membership fees up 17%. However, valuation looks stretched, with P/S at 1.24 vs a 5-year average of 0.83 and forward P/E at 38 vs 27, so the article suggests waiting for a better entry; Walmart is scheduled to report Q2 results on Aug. 20.

Analysis

WMT is still a high-quality defensive compounder, but the market has already capitalized that quality into a premium multiple. The key second-order issue is not whether the business is resilient; it’s whether incremental growth is now coming from lower-margin e-commerce fulfillment and membership monetization, which can sustain sales growth while capping incremental operating leverage. In that setup, the stock behaves more like a long-duration bond proxy than a classic retailer, so upside depends heavily on rates and risk appetite.

The nearer-term catalyst is earnings, and the setup is asymmetric: a clean print may not move the multiple much, while even modest margin slippage could trigger de-rating because expectations are already elevated. That makes WMT a weak candidate for fresh capital ahead of the print unless you have conviction that operating income will reaccelerate faster than revenue. If consumer weakness persists, WMT can take share from smaller grocers and regional discounters, but that benefit may show up first in traffic metrics rather than equity outperformance.

Contrarian view: the consensus may be underestimating how expensive defensiveness can get when investors crowd into “safe growth.” WMT is not obviously broken, but it may be over-owned relative to the magnitude of its expected earnings acceleration. The long-term bull case remains intact, but tactically the better trade is likely to buy weakness, not chase strength.

Key Decisions for Investors

• Do not initiate new WMT longs before Aug. 20; wait for the print or a 5-8% pullback to improve risk/reward. Falsifier: guidance that implies operating income growth reaccelerating faster than sales.
• For existing WMT exposure, consider a post-earnings collar or call spread sale into elevated implied volatility to protect against a 7-10% multiple compression event over the next 1-2 months.
• If you need defensive retail exposure, prefer to add on weakness rather than at current levels; WMT is a hold, not an aggressive buy, until valuation resets. Time horizon: 3-6 months.
• Watch for a miss on margin or e-commerce monetization; that would likely compress the premium multiple faster than a simple revenue miss and would be the cleanest short-term catalyst to reduce exposure.