Walmart Q2 Earnings Beat Estimates but Can Higher Costs Limit Upside?

Walmart reported second-quarter earnings that topped expectations, with revenue climbing 5.9% and earnings per share jumping 19.1% to 81 cents. The retailer also raised its fiscal 2027 guidance on the strength of continued digital momentum.

But the beat comes with a margin squeeze ahead. Rising healthcare, fuel, and depreciation costs are pressuring the bottom line, while capital expenditures are now expected to hit 4% of sales—up from prior guidance of 3.5%. That uptick in capex could limit near-term profit growth and weigh on cash conversion even as top-line momentum holds.

WMT's digital business continues to drive revenue growth, offsetting some of the cost headwinds. The question for traders is whether the guidance raise reflects confidence in offsetting higher operating expenses, or simply strong revenue visibility masking tighter margins.

The fiscal 2027 outlook improvement suggests management sees a path through the cost pressure, but the widening gap between revenue growth and capex intensity will test the stock's premium valuation if profit expansion slows in coming quarters.