What Could Lift Walmart Stock Is Not On Its Shelves

The retailer keeps cutting shelf prices, and profit is growing far faster than the U.S. comp, with almost half of that growth coming from areas like advertising, marketplace, and membership.

Walmart (WMT) stock trades about 22% below its 52-week high, down 11.8% over the past three months while the S&P 500 returned 2.1%. It has cleared a 30% gain inside two months only once since 2010, and that run came in 2026. The case for a second one is not on the shelves. It is in what can keep paying for the price cuts.

Eleven Thousand Rollbacks Are A Bet On A Delayed Payoff

The company ran more than 11,000 rollbacks at Walmart U.S. in fiscal Q2 2027, up from 7,200 at the end of fiscal Q1 2027. The money went into the basket rather than to the bottom line,  cutting prices on ground beef and across the meat department, where prices had run high, and rolling out a back-to-school lunch basket of ten high-protein lunches for under $2. By the company’s own account, the payoff comes on a delay, with units and transactions moving first and the lasting impact in food showing up over weeks and months.

Advertising, Marketplace And Membership Changed The Profit Mix

Giving price away is getting easier to afford because the profit has moved off the shelf. Management attributes almost half of its profit growth to areas like membership, advertising and marketplace. In fiscal Q2 2027, U.S. marketplace sales grew 52%, and global advertising rose 38%, while membership fee revenue reached an all-time high on 17% growth. Walmart Connect, which leads the U.S. side of that ad line, was up 43% in fiscal Q2 2027. Against roughly $725 billion of trailing-twelve-month revenue, none of this makes Walmart a different company; it makes it a differently profitable one.

Walmart U.S. comped 2.6% in fiscal Q2 2027, nearer 3.5% on the CFO’s own reading adjusted for health and wellness, while enterprise operating income grew 10% excluding tariff refunds, the widest gap between profit growth and the U.S. comp the company says it has seen in twenty years. Profit running that far ahead of the comp is the kind of earnings quality the Trefis High Quality Portfolio looks for in its holdings.

The Refund Bought The Rollbacks, Not The Quarter

Walmart was eligible for about $2.9 billion of tariff refunds and has received substantially all of them; after the price cuts they funded, the net benefit to reported operating income growth in fiscal Q2 2027 was roughly 750 basis points. Strip the refunds out and fiscal Q2 2027 still finished at the top of the guided range: the mix carried the quarter, not the windfall. The refunds are what paid for the price cuts, which is why management has guided fiscal Q3 2027 operating income growth down to 2% to 4% in constant currency as the full weight of those cuts lands, and asks that the two quarters be read together. Walmart raised its full-year sales and profit ranges anyway.

The case for a second run rests on one line: management expects Walmart U.S. sales growth to improve in fiscal Q3 2027. The company reports share gains in food and says gains of that type tend to be durable over time; if sales growth does not follow, the money bought a discount rather than share, and a large part of it is already spent. For a name this far below its high, the useful comparison is other stocks trading well off their highs.

A Better Profit Mix Is Still One Position

Watching a retailer rebuild where its profit comes from is interesting, but Walmart is still one company carrying whatever you commit to it. Spreading that over a disciplined basket of quality names is the point of the Trefis High Quality Portfolio. That portfolio has a track record of outpacing the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000.