Buy Target or Walmart Stock After Beating Q3 EPS Expectations?

Walmart outpaced Target in Q3 results and guidance: Walmart reported sales up 6% YoY to $179.49 billion and EPS of $0.62 (vs. $0.61 est.), and raised fiscal-2026 net sales growth to 4.8%–5.1% and full-year operating income growth to 8.5%–9.5%, while Target posted EPS of $1.78 (vs. $1.76 est.) but sales slipped just over 1% to $25.27 billion and it trimmed the top end of FY26 EPS to $7.00–$8.00 from $7.00–$9.00, providing no revenue guidance and flagging weakness in discretionary categories offset by strength in food, beverage and digital. Analysts’ EPS revisions now favor Walmart—FY26/FY27 estimates point to modestly higher multi‑year earnings growth—whereas Target faces a material decline from FY25 and recent downward revisions. Zacks maintains both at a Hold (Rank #3), with Walmart’s stronger beat and upgraded outlook implying greater potential upside while Target’s cautious stance clouds its near-term rebound prospects.

Analysis

Walmart and Target both beat Q3 consensus EPS, but the underlying pictures diverge: Walmart reported Q3 sales of $179.49 billion (up 6% YoY) and EPS of $0.62 versus $0.61 est., while Target posted EPS of $1.78 versus $1.76 est. with sales down just over 1% YoY to $25.27 billion and missing estimates of $25.35 billion. Walmart’s print built on its global e-commerce expansion and a modest sequential EPS improvement from $0.58 a year ago; Target’s EPS declined from $1.85 a year ago and management cited affordability pressures and weaker discretionary traffic.

Walmart raised fiscal-2026 net sales growth guidance to 4.8%–5.1% (from 3.75%–4.75%) and lifted full-year operating income growth to 8.5%–9.5% (nearly +400 bps), while Target trimmed the top end of FY26 EPS to $7.00–$8.00 from $7.00–$9.00 and issued no revenue guidance. Consensus-model moves favor Walmart — FY26/FY27 EPS estimates show modest multi-year growth for Walmart versus a projected 17% EPS drop for Target from FY25 and recent downward revisions.

Zacks retains both at a Rank #3 (Hold), reflecting that Walmart’s beat and upgraded outlook create greater upside potential, whereas Target’s cautious commentary, discretionary softness, and lack of revenue guidance increase execution risk through the holiday season.

Key Decisions for Investors

• Favor selectively increasing exposure to WMT on the back of raised fiscal-2026 sales and operating-income guidance and confirmed e-commerce strength,
• Delay adding to TGT until management provides revenue guidance or EPS revisions stabilize given the trimmed FY26 outlook and discretionary weakness,
• Monitor holiday-sales cadence, weekly comps and analyst EPS revisions as the primary short-term catalysts that will validate Walmart’s guidance or deepen Target’s downside,
• Maintain position sizing discipline or use modest hedges given both names currently carry a Zacks Hold and consumer-discretionary risk into the holidays