Inquiring about Walmart Inc. (NASDAQ:WMT) on September 10, a caller asked if they should “keep it.” Mad Money host Jim Cramer replied:
I got to tell you, this one is a short and long-term, okay? Short-term, I think I know what Walmart’s doing. I think that they’re letting their customers have a big break. They’re not passing along all of these costs. That is going to earn them tremendous love when things get better. So the wise situation is to say this: Walmart trades at 36 times earnings. It deserves to trade lower just because of what’s happening at the company now and higher what’s happening at the company when this inflation bout ends. So you buy some at $106, $105, and then buy some at $95. And yes, it could trade to $95. It does not have yield support. This is not like Target, which had that yield support. Target’s doing better than Walmart right now. It is.
Walmart’s Growth and Target’s Momentum
Walmart Inc.’s second-quarter fiscal 2027 revenue rose 5.9% year over year to $187.9 billion, while global e-commerce sales increased 23%. Global advertising revenue rose 38%, and membership-fee revenue increased 17% globally. Walmart U.S. comparable sales, excluding fuel, grew 2.6%. The company is also using tariff refunds to support lower prices. It said tariff refunds increased its gross profit rate during the quarter, while price investments partially offset the benefit.
Target Corporation (NYSE:TGT) has stronger recent comparable-sales momentum. Its second-quarter sales rose 5.3%, comparable sales increased 3.8%, and traffic rose 3.6%. The company also raised its full-year sales-growth outlook to approximately 5%. Its second-quarter GAAP and adjusted EPS were $4.11, including a $1.65 benefit from tariff refunds. Excluding tariff refunds, GAAP and adjusted EPS increased 20% year over year. CEO Michael Fiddelke said Target had reduced prices on more than 10,000 frequently purchased items over the past year and acknowledged that “there’s still meaningful work ahead.”
Bear Case
Walmart Inc.’s biggest risk is valuation. Its premium forward PE of 36.76 leaves the stock more exposed if U.S. comparable-sales growth remains modest while the company continues investing in prices. Walmart’s 2.6% U.S. comparable-sales growth also trails Target’s 3.8%.
Target Corporation’s risk is different. The company has improved traffic and comparable sales, but its second-quarter adjusted EPS included a $1.65 tariff-refund benefit. Target’s full-year EPS guidance also includes approximately $1.65 from the second-quarter tariff refunds.
Hedge Funds Favor Walmart
Insider Monkey, which tracks more than 1,000 hedge funds, shows 111 funds held Walmart in the second quarter, up from 99 in the first quarter. Target had 63 hedge-fund holders, down from 68. The institutional data favors Walmart Inc., despite Cramer’s of Target Corporation doing better. Meanwhile, Walmart’s short interest was roughly 1.1% to 2.0% of float while Target’s was roughly 3.0% to 3.5%. Neither level indicates an unusually crowded short trade, but Target’s short interest is higher than Walmart’s.
For investors choosing between the two, the latest results show a mixed picture. Target reported faster comparable-sales growth, while Walmart delivered stronger e-commerce, advertising and membership-fee growth. Target’s second-quarter adjusted EPS also included a $1.65 tariff-refund benefit, while Walmart trades at a substantially higher valuation.
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