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Walmart shares faced some pressure post-earnings, though results were overall positive.
Retail continues to dominate the upcoming earnings docket, with results from COST, DKS, BBY, and more coming.
Earnings and revenues for the 474 S&P 500 members that have reported are up 25% on 11% higher revenues YoY.
Walmart (WMT - Free Report) shares couldn’t sustain their impressive year-to-date momentum following its quarterly results, as the market was disappointed by the modest guidance downgrade. The guidance issue was mostly due to high fuel costs, even though they reaffirmed earlier sales and operating earnings expectations.
Walmart shares had enjoyed an impressive run before the quarterly release, outperforming the broader market by almost 2X, so some sell-the-news behavior would be expected. We should keep in mind, however, that the internals of the Walmart report reconfirm all the positives that have boosted the stock over the last few years and allowed the company to briefly join the trillion-dollar market cap club.
Walmart continued to benefit from market share gains and showed strong momentum in newer, higher-margin businesses such as e-commerce, advertising, marketplace, and membership subscriptions.
The size and scale of Walmart’s operations make it a bellwether for consumer spending trends, which have been in the spotlight amid high oil prices. Affordability was already an issue due to cumulative inflation in the post-COVID period, and the recent rise in fuel costs has raised concerns about reversing the gains made on the inflation front over the past year.
Walmart acknowledged stress in its customer base, a comment that has a direct read-through to all retailers on deck to report results in the coming days. Retailers on deck to report results this week include Best Buy, Costco, Gap, Kohl’s, Dicks Sporting Goods, and others.
A favorable read-through from the Walmart report is the strong results from the company’s general merchandise business, which broadly corresponds to discretionary product categories. Management noted that sales trends improved as the quarter progressed, and the gains were across various general merchandise categories, such as apparel, gaming, and automotive.
The very strong sales performance at Target (TGT - Free Report) confirms this favorable reading for Walmart, suggesting that the persistent softness in discretionary spending categories in the post-COVID period may have run its course. Target is far more indexed to discretionary product categories than Walmart, though Target management was understandably cautious in its outlook given the macroeconomic uncertainty.
The chart below shows the one-year performance of Walmart shares (green line, up +25.2%) relative to Target (orange line, up +32.4%), the S&P 500 index (red line, up +31.7%), and the Mag 7 group (blue line, up +19.2%).
Image Source: Zacks Investment Research
With respect to the Retail sector 2026 Q1 earnings season scorecard, we now have results from 25 of the 31 retailers in the S&P 500 index. Regular readers know that Zacks has a dedicated stand-alone economic sector for the retail space, unlike its placement in the Consumer Staples and Consumer Discretionary sectors in the Standard & Poor’s industry classification. The Zacks Retail sector includes not only Walmart, Target, and other traditional retailers, but also online vendors like Amazon (AMZN - Free Report) and restaurant players.
Total Q1 earnings for these 25 retailers that have reported are up +3.7% from the same period last year on +10.7% higher revenues, with 72% beating EPS estimates and 88% beating revenue estimates.
The comparison charts below put the Q1 beats percentages for these retailers in a historical context.
Image Source: Zacks Investment Research
As you can see above, the EPS beats percentages for these online players and restaurant operators are tracking significantly below the historical averages for this group of companies, but revenue beats are far more numerous.
With respect to the earnings and revenue growth rates at this stage, we like to show the group’s performance with and without Amazon, whose results are among the 17 companies that have already reported. As we know, Amazon’s Q1 earnings were modestly down (-0.8%) on +16.6% higher revenues, as it missed both EPS and top- line expectations.
The two comparison charts below show the Q1 earnings and revenue growth relative to other recent periods, both with Amazon’s results (left side chart) and without Amazon’s numbers (right side chart).
Image Source: Zacks Investment Research
As you can see above, earnings for the group outside of Amazon are up +7.4% on a +9.4% top-line gain.
The Earnings Big Picture
The Q1 earnings season reconfirmed the steadily improving earnings outlook we have consistently highlighted in our earnings commentary.
The blockbuster earnings results from Nvidia kept the spotlight on the strong earnings power of the mega-cap Tech players in the Magnificent 7 group, but results have been impressive across all sectors. Most companies comfortably beat the Zacks Consensus EPS and revenue estimates and are showing accelerating earnings and revenue growth trends.
Most importantly, the substance and tone of management guidance have largely been reassuring, notwithstanding the uncertain geopolitical backdrop. This is keeping the aggregate revisions trend positive, which we discuss in some detail later on.
The chart below shows current 2026 Q1 earnings and revenue growth expectations in the context of where growth has been in the preceding five quarters and what is expected in the coming four quarters.
Image Source: Zacks Investment Research
Regular readers of our earnings commentary are familiar with the steadily improving earnings outlook we have consistently highlighted over the past year. This improvement in the earnings outlook has been driven mostly by the Tech sector over the past year, with positive Tech sector estimate revisions offsetting negative revisions elsewhere and keeping the aggregate revisions trend neutral to positive.
This favorable revisions trend has modestly expanded beyond its Tech-sector core over the last couple of quarters, and we are seeing that at play for 2026 Q2 as well, as shown nearby.
As you can see in the above chart, the current expectation is of +21% earnings growth in 2026 Q2 on +10.3% higher revenues. The chart below shows how these expectations have evolved in recent weeks.
Image Source: Zacks Investment Research
While estimates have modestly declined over the past week, they are otherwise up for 7 of the 16 Zacks sectors since the quarter got underway. These sectors are: Tech, Energy, Basic Materials, Utilities, Industrials, Retail, and Business Services.
The positive revisions trend for the Energy and Basic Materials sectors is primarily a function of the conflict in the Persian Gulf and its effect on the supply of oil, LNG, and other commodities.
The upgrade to Retail sector earnings estimates is primarily a function of momentum in Amazon’s business, which we group in the Zacks Retail sector. We suspect that elevated oil prices will prove to be a significant headwind for the sector’s profitability. The negative impact on the Retail sector’s earnings outlook will mostly be through diminished consumer demand, but the freight/logistics component will also be stressed due to high oil prices, as we saw in the Walmart release.
On the negative side, Q2 estimates have declined for 9 of the 16 Zacks sectors. The sectors suffering the most declines include Transportation, Autos, Consumer Discretionary, Construction, Finance, and Consumer Staples.
For calendar year 2026, total S&P 500 earnings are currently expected to be up +19.5%, compared to +13.4% earnings growth last year and +16.7% expected next year.
All 16 Zacks sectors are currently expected to enjoy positive earnings growth in 2026, a development that we haven’t seen in a very long time. The Tech and Energy sectors are big contributors to earnings growth in 2026, with +34% and +60.5% earnings growth, respectively.
Excluding the Energy sector’s substantial contribution, 2026 earnings growth for the rest of the index would +17.6% (vs. +19.5% otherwise. Excluding the Tech sector, index earnings would be up +12.1% in 2026.
The chart below shows the aggregate growth picture on an annual basis.
Image Source: Zacks Investment Research
2026 Q1 Earnings Season Scorecard
Through Friday, May 22nd, we have seen Q1 results from 474 S&P 500 members or 94.8% of the index’s total membership. Total earnings for these 474 index members are up +25% from the same period last year on +11% higher revenues, with 80.2% beating EPS estimates and 79.1% beating revenue estimates.
We have more than 100 companies on deck to report Q1 results this week, including 12 S&P 500 members. We listed earlier the notable retailers reporting this week, but other major companies on deck to report results include Salesforce, Dell Technologies, HP, Snowflake, and others.
The comparison charts below put the growth rates for the companies that have reported with what we had seen from this same group of companies in other recent periods.
Image Source: Zacks Investment Research
The comparison charts below put the Q1 EPS and revenue beats percentages for this group of companies relative to what we had seen from them in other recent periods.
Image Source: Zacks Investment Research
The chart below shows how net margins for the 474 index members that have reported Q1 results compare to other recent periods for this same group of companies.
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Strong Retail Earnings in a Tough Environment
Key Takeaways
Walmart (WMT - Free Report) shares couldn’t sustain their impressive year-to-date momentum following its quarterly results, as the market was disappointed by the modest guidance downgrade. The guidance issue was mostly due to high fuel costs, even though they reaffirmed earlier sales and operating earnings expectations.
Walmart shares had enjoyed an impressive run before the quarterly release, outperforming the broader market by almost 2X, so some sell-the-news behavior would be expected. We should keep in mind, however, that the internals of the Walmart report reconfirm all the positives that have boosted the stock over the last few years and allowed the company to briefly join the trillion-dollar market cap club.
Walmart continued to benefit from market share gains and showed strong momentum in newer, higher-margin businesses such as e-commerce, advertising, marketplace, and membership subscriptions.
The size and scale of Walmart’s operations make it a bellwether for consumer spending trends, which have been in the spotlight amid high oil prices. Affordability was already an issue due to cumulative inflation in the post-COVID period, and the recent rise in fuel costs has raised concerns about reversing the gains made on the inflation front over the past year.
Walmart acknowledged stress in its customer base, a comment that has a direct read-through to all retailers on deck to report results in the coming days. Retailers on deck to report results this week include Best Buy, Costco, Gap, Kohl’s, Dicks Sporting Goods, and others.
A favorable read-through from the Walmart report is the strong results from the company’s general merchandise business, which broadly corresponds to discretionary product categories. Management noted that sales trends improved as the quarter progressed, and the gains were across various general merchandise categories, such as apparel, gaming, and automotive.
The very strong sales performance at Target (TGT - Free Report) confirms this favorable reading for Walmart, suggesting that the persistent softness in discretionary spending categories in the post-COVID period may have run its course. Target is far more indexed to discretionary product categories than Walmart, though Target management was understandably cautious in its outlook given the macroeconomic uncertainty.
The chart below shows the one-year performance of Walmart shares (green line, up +25.2%) relative to Target (orange line, up +32.4%), the S&P 500 index (red line, up +31.7%), and the Mag 7 group (blue line, up +19.2%).
Image Source: Zacks Investment Research
With respect to the Retail sector 2026 Q1 earnings season scorecard, we now have results from 25 of the 31 retailers in the S&P 500 index. Regular readers know that Zacks has a dedicated stand-alone economic sector for the retail space, unlike its placement in the Consumer Staples and Consumer Discretionary sectors in the Standard & Poor’s industry classification. The Zacks Retail sector includes not only Walmart, Target, and other traditional retailers, but also online vendors like Amazon (AMZN - Free Report) and restaurant players.
Total Q1 earnings for these 25 retailers that have reported are up +3.7% from the same period last year on +10.7% higher revenues, with 72% beating EPS estimates and 88% beating revenue estimates.
The comparison charts below put the Q1 beats percentages for these retailers in a historical context.
Image Source: Zacks Investment Research
As you can see above, the EPS beats percentages for these online players and restaurant operators are tracking significantly below the historical averages for this group of companies, but revenue beats are far more numerous.
With respect to the earnings and revenue growth rates at this stage, we like to show the group’s performance with and without Amazon, whose results are among the 17 companies that have already reported. As we know, Amazon’s Q1 earnings were modestly down (-0.8%) on +16.6% higher revenues, as it missed both EPS and top- line expectations.
The two comparison charts below show the Q1 earnings and revenue growth relative to other recent periods, both with Amazon’s results (left side chart) and without Amazon’s numbers (right side chart).
Image Source: Zacks Investment Research
As you can see above, earnings for the group outside of Amazon are up +7.4% on a +9.4% top-line gain.
The Earnings Big Picture
The Q1 earnings season reconfirmed the steadily improving earnings outlook we have consistently highlighted in our earnings commentary.
The blockbuster earnings results from Nvidia kept the spotlight on the strong earnings power of the mega-cap Tech players in the Magnificent 7 group, but results have been impressive across all sectors. Most companies comfortably beat the Zacks Consensus EPS and revenue estimates and are showing accelerating earnings and revenue growth trends.
Most importantly, the substance and tone of management guidance have largely been reassuring, notwithstanding the uncertain geopolitical backdrop. This is keeping the aggregate revisions trend positive, which we discuss in some detail later on.
The chart below shows current 2026 Q1 earnings and revenue growth expectations in the context of where growth has been in the preceding five quarters and what is expected in the coming four quarters.
Image Source: Zacks Investment Research
Regular readers of our earnings commentary are familiar with the steadily improving earnings outlook we have consistently highlighted over the past year. This improvement in the earnings outlook has been driven mostly by the Tech sector over the past year, with positive Tech sector estimate revisions offsetting negative revisions elsewhere and keeping the aggregate revisions trend neutral to positive.
This favorable revisions trend has modestly expanded beyond its Tech-sector core over the last couple of quarters, and we are seeing that at play for 2026 Q2 as well, as shown nearby.
As you can see in the above chart, the current expectation is of +21% earnings growth in 2026 Q2 on +10.3% higher revenues. The chart below shows how these expectations have evolved in recent weeks.
Image Source: Zacks Investment Research
While estimates have modestly declined over the past week, they are otherwise up for 7 of the 16 Zacks sectors since the quarter got underway. These sectors are: Tech, Energy, Basic Materials, Utilities, Industrials, Retail, and Business Services.
The positive revisions trend for the Energy and Basic Materials sectors is primarily a function of the conflict in the Persian Gulf and its effect on the supply of oil, LNG, and other commodities.
The upgrade to Retail sector earnings estimates is primarily a function of momentum in Amazon’s business, which we group in the Zacks Retail sector. We suspect that elevated oil prices will prove to be a significant headwind for the sector’s profitability. The negative impact on the Retail sector’s earnings outlook will mostly be through diminished consumer demand, but the freight/logistics component will also be stressed due to high oil prices, as we saw in the Walmart release.
On the negative side, Q2 estimates have declined for 9 of the 16 Zacks sectors. The sectors suffering the most declines include Transportation, Autos, Consumer Discretionary, Construction, Finance, and Consumer Staples.
For calendar year 2026, total S&P 500 earnings are currently expected to be up +19.5%, compared to +13.4% earnings growth last year and +16.7% expected next year.
All 16 Zacks sectors are currently expected to enjoy positive earnings growth in 2026, a development that we haven’t seen in a very long time. The Tech and Energy sectors are big contributors to earnings growth in 2026, with +34% and +60.5% earnings growth, respectively.
Excluding the Energy sector’s substantial contribution, 2026 earnings growth for the rest of the index would +17.6% (vs. +19.5% otherwise. Excluding the Tech sector, index earnings would be up +12.1% in 2026.
The chart below shows the aggregate growth picture on an annual basis.
Image Source: Zacks Investment Research
2026 Q1 Earnings Season Scorecard
Through Friday, May 22nd, we have seen Q1 results from 474 S&P 500 members or 94.8% of the index’s total membership. Total earnings for these 474 index members are up +25% from the same period last year on +11% higher revenues, with 80.2% beating EPS estimates and 79.1% beating revenue estimates.
We have more than 100 companies on deck to report Q1 results this week, including 12 S&P 500 members. We listed earlier the notable retailers reporting this week, but other major companies on deck to report results include Salesforce, Dell Technologies, HP, Snowflake, and others.
The comparison charts below put the growth rates for the companies that have reported with what we had seen from this same group of companies in other recent periods.
Image Source: Zacks Investment Research
The comparison charts below put the Q1 EPS and revenue beats percentages for this group of companies relative to what we had seen from them in other recent periods.
Image Source: Zacks Investment Research
The chart below shows how net margins for the 474 index members that have reported Q1 results compare to other recent periods for this same group of companies.
Image Source: Zacks Investment Research
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>>Tech and Energy Contribute Heavily to Positive Earnings Outlook