Walmart Stock Trades at Premium Valuation Amid Fuel Cost Pressures

Walmart's (NYSE: WMT) stock price has declined by 11.8% over the past three months, reflecting growing investor caution despite solid underlying business momentum. The retail giant's performance lagged behind its peers, with Target Corporation (NYSE: TGT) and Dollar General Corporation (NYSE: DG) surging 26.8% and 17.5%, respectively. Costco Wholesale Corporation (NASDAQ: COST) declined by 8.1% during the same period.

Elevated fuel costs are putting pressure on Walmart's distribution and fulfillment network, despite overall sales growth at a healthy pace. In the first quarter of fiscal 2027, adjusted operating income increased 5.1% on a constant-currency basis, trailing the 5.7% growth in constant-currency net sales due to higher fuel costs and expense deleverage.

The company's adjusted operating expenses as a percentage of net sales rose by 23 basis points to 21.1%, driven by higher depreciation from capital investments and rising U.S. healthcare expenses tied to enrollment growth and medical-cost inflation. Management noted that while higher-income customers continue to spend confidently, lower-income shoppers are more budget-conscious, with reduced fuel purchases cited as one signal of financial stress among some consumers.

Walmart's e-commerce platform continues to show strong momentum, with global e-commerce net sales advancing 26% and accounting for 23% of total net sales. The company has made significant investments in automation, with roughly half of its U.S. e-commerce fulfillment-center volume now automated.