We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Walmart vs. Target: Which Retail Giant is Poised to Outperform?
Read MoreHide Full Article
Walmart Inc. (WMT - Free Report) and Target Corporation (TGT - Free Report) both dominate the retail landscape, offering everything from groceries and electronics to fashion and household essentials. Walmart, the world’s largest retailer, is known for its unmatched scale, competitive pricing and growing digital presence. Target has carved out a loyal customer base, refocusing on its core strengths — affordable style, curated merchandising and strong store-brand appeal.
As we move through 2025, both WMT and TGT are navigating a retail environment shaped by cautious consumer spending and rising pressure from e-commerce competitors. Walmart is doubling down on its strengths in grocery, logistics, and tech-enabled efficiency, while Target is focused on recovering from past margin pressure through tighter inventory management and improved merchandising.
For investors comparing WMT vs. TGT stock today, the decision comes down to which company offers the better mix of stability, growth potential, and value in a rapidly evolving retail landscape.
One-Year Performance
Image Source: Zacks Investment Research
The Case for Walmart
Walmart continues to thrive, fueled by the strength of its highly diversified business model and consistent contributions across segments, markets, and sales channels. The company is effectively capturing increased traffic both in-store and online, underscoring its ability to adapt to a rapidly evolving retail landscape. Its multi-channel revenue approach — spanning physical stores, e-commerce, advertising and memberships — provides a strong, resilient foundation for long-term growth.
High-margin initiatives like Walmart Connect, the company’s advertising platform, and Walmart+, its subscription-based membership program, are becoming key profit engines. In the first quarter of fiscal 2026, advertising revenues soared 50%, while membership income grew by 14.8%, showcasing Walmart’s successful pivot toward tech-enabled, higher-margin services that enhance both profitability and customer loyalty.
A cornerstone of Walmart’s success lies in its robust omnichannel strategy. The company has made significant investments in data analytics, store operations, and digital expansion to deliver a seamless shopping experience across platforms. In the first quarter of fiscal 2026, Walmart’s global e-commerce sales climbed 22%, fueled by store-fulfilled pickup and delivery services. Supporting this momentum is its optimized last-mile delivery infrastructure, which is on track to provide same-day delivery to 95% of U.S. households, further strengthening its competitive edge in the fast-paced retail environment.
While Walmart is off to a strong start in 2025, the company has flagged potential headwinds in the coming quarters — most notably from tariffs and broader economic uncertainty. Even at reduced levels, tariff-related costs could lead to modest price increases in the near term. Additionally, currency fluctuations may pose challenges to international operations. However, Walmart’s expanding e-commerce footprint, strong everyday value proposition and continued growth in high-margin segments like advertising and memberships provide a solid cushion against near-term volatility.
The Case for Target
Target entered 2025 with a renewed focus on operational discipline and delivering greater customer value, showing early signs of stabilization after a challenging few years. The company has made progress in improving inventory reliability, enhancing fulfillment speeds and investing in store remodels and digital capabilities. In the first quarter of fiscal 2025, delivery speeds improved by 20%, while same-day services — particularly through Target Circle 360 — rose over 35%, meeting rising demand for convenience. Store remodels are delivering results, generating a 2% to 4% lift in comparable sales at updated locations. The company is expanding its third-party marketplace, Target Plus, which posted double-digit growth, while reinforcing its brand appeal through successful collaborations like the Kate Spade collection.
These strategic investments in technology, fulfillment, and store expansion reflect Target’s long-term vision to strengthen its competitive position in retail. However, the path to recovery has proven slower and is more uncertain than anticipated. In the fiscal first quarter, total sales declined 2.8% due to a 3.8% drop in comparable sales and a 2.4% decrease in traffic. Discretionary categories such as apparel and home — long-time strengths for Target — remain under pressure as inflation and economic concerns push consumers toward essential spending. Despite promotional campaigns like Target Circle Week, elevated markdowns and higher fulfillment costs led to a 60-basis-point contraction in gross margin. Meanwhile, inventory levels rose 11% year over year, indicating further margin risks in the near term due to additional markdowns.
Profitability also remains under pressure. Adjusted earnings per share (EPS) dropped to $1.30 in the fiscal first quarter, down from $2.03 in the prior-year period, as weaker sales and cost inflation weighed on results. Rising SG&A expenses — including higher labor, healthcare, and capital investments — are proving difficult to absorb in a slower-growth environment. Tariff-related uncertainty and cautious consumer sentiment continue to complicate matters. On its most recent earnings call, management projected a low single-digit decline in full-year sales and revised its adjusted EPS guidance to a range of $7 to $9, citing macroeconomic headwinds and ongoing weakness in discretionary categories.
While Target still benefits from strong brand equity, loyal customers, and a nationwide footprint, the company faces multiple near-term challenges. Persistent cost pressure, declining traffic and softness in higher-margin categories are likely to weigh on its performance through the rest of 2025. Until economic conditions improve and discretionary demand rebounds, Target’s recovery may remain gradual and uneven.
How Does the Zacks Consensus Estimate Compare for WMT & TGT?
The Zacks Consensus Estimate for Walmart’s fiscal 2026 EPS remains steady at $2.59 over the past seven days, reflecting a projected year-over-year growth of 3.2%.
WMT’s Estimate Revision Trend
Image Source: Zacks Investment Research
In contrast, the EPS estimate for Target for fiscal 2025 has moved down 9.6% to $7.72 in the past seven days, indicating a year-over-year decline of 12.9%. This divergence underscores a more favorable earnings outlook for Walmart compared to Target. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
TGT’s Estimate Revision Trend
Image Source: Zacks Investment Research
Price Performance & Valuation of WMT & TGT
Over the past 12 months, Walmart stock has delivered an impressive 47.3% return, significantly outpacing the broader S&P 500 Index, which rose 9.3% during the same period. In sharp contrast, Target has experienced a 35.1% decline in its stock price, reflecting investor concerns over earnings and operational headwinds.
From a valuation standpoint, Walmart currently trades at a forward price-to-earnings (P/E) ratio of 35.82x. Meanwhile, Target trades at a more modest forward P/E of 12x amid operational challenges and weaker earnings visibility.
The combination of strong price momentum and a premium valuation for Walmart signals a bullish market outlook, backed by consistent earnings performance and defensive sector positioning.
Image Source: Zacks Investment Research
Conclusion
While Target has made progress through strategic investments in digital capabilities and store enhancements, its near-term outlook remains clouded by ongoing margin pressures, weak discretionary demand, and cautious consumer spending. In contrast, Walmart continues to position itself as a more stable retail investment in 2025, driven by consistent earnings growth, strong omnichannel execution, and rising contributions from high-margin segments like advertising and memberships, reinforcing investor confidence in its ability to navigate a challenging economic environment.
WMT currently carries a Zacks Rank #3 (Hold), while TGT carries a Zacks Rank #5 (Strong Sell).
Image: Bigstock
Walmart vs. Target: Which Retail Giant is Poised to Outperform?
Walmart Inc. (WMT - Free Report) and Target Corporation (TGT - Free Report) both dominate the retail landscape, offering everything from groceries and electronics to fashion and household essentials. Walmart, the world’s largest retailer, is known for its unmatched scale, competitive pricing and growing digital presence. Target has carved out a loyal customer base, refocusing on its core strengths — affordable style, curated merchandising and strong store-brand appeal.
As we move through 2025, both WMT and TGT are navigating a retail environment shaped by cautious consumer spending and rising pressure from e-commerce competitors. Walmart is doubling down on its strengths in grocery, logistics, and tech-enabled efficiency, while Target is focused on recovering from past margin pressure through tighter inventory management and improved merchandising.
For investors comparing WMT vs. TGT stock today, the decision comes down to which company offers the better mix of stability, growth potential, and value in a rapidly evolving retail landscape.
One-Year Performance
Image Source: Zacks Investment Research
The Case for Walmart
Walmart continues to thrive, fueled by the strength of its highly diversified business model and consistent contributions across segments, markets, and sales channels. The company is effectively capturing increased traffic both in-store and online, underscoring its ability to adapt to a rapidly evolving retail landscape. Its multi-channel revenue approach — spanning physical stores, e-commerce, advertising and memberships — provides a strong, resilient foundation for long-term growth.
High-margin initiatives like Walmart Connect, the company’s advertising platform, and Walmart+, its subscription-based membership program, are becoming key profit engines. In the first quarter of fiscal 2026, advertising revenues soared 50%, while membership income grew by 14.8%, showcasing Walmart’s successful pivot toward tech-enabled, higher-margin services that enhance both profitability and customer loyalty.
A cornerstone of Walmart’s success lies in its robust omnichannel strategy. The company has made significant investments in data analytics, store operations, and digital expansion to deliver a seamless shopping experience across platforms. In the first quarter of fiscal 2026, Walmart’s global e-commerce sales climbed 22%, fueled by store-fulfilled pickup and delivery services. Supporting this momentum is its optimized last-mile delivery infrastructure, which is on track to provide same-day delivery to 95% of U.S. households, further strengthening its competitive edge in the fast-paced retail environment.
While Walmart is off to a strong start in 2025, the company has flagged potential headwinds in the coming quarters — most notably from tariffs and broader economic uncertainty. Even at reduced levels, tariff-related costs could lead to modest price increases in the near term. Additionally, currency fluctuations may pose challenges to international operations. However, Walmart’s expanding e-commerce footprint, strong everyday value proposition and continued growth in high-margin segments like advertising and memberships provide a solid cushion against near-term volatility.
The Case for Target
Target entered 2025 with a renewed focus on operational discipline and delivering greater customer value, showing early signs of stabilization after a challenging few years. The company has made progress in improving inventory reliability, enhancing fulfillment speeds and investing in store remodels and digital capabilities. In the first quarter of fiscal 2025, delivery speeds improved by 20%, while same-day services — particularly through Target Circle 360 — rose over 35%, meeting rising demand for convenience. Store remodels are delivering results, generating a 2% to 4% lift in comparable sales at updated locations. The company is expanding its third-party marketplace, Target Plus, which posted double-digit growth, while reinforcing its brand appeal through successful collaborations like the Kate Spade collection.
These strategic investments in technology, fulfillment, and store expansion reflect Target’s long-term vision to strengthen its competitive position in retail. However, the path to recovery has proven slower and is more uncertain than anticipated. In the fiscal first quarter, total sales declined 2.8% due to a 3.8% drop in comparable sales and a 2.4% decrease in traffic. Discretionary categories such as apparel and home — long-time strengths for Target — remain under pressure as inflation and economic concerns push consumers toward essential spending. Despite promotional campaigns like Target Circle Week, elevated markdowns and higher fulfillment costs led to a 60-basis-point contraction in gross margin. Meanwhile, inventory levels rose 11% year over year, indicating further margin risks in the near term due to additional markdowns.
Profitability also remains under pressure. Adjusted earnings per share (EPS) dropped to $1.30 in the fiscal first quarter, down from $2.03 in the prior-year period, as weaker sales and cost inflation weighed on results. Rising SG&A expenses — including higher labor, healthcare, and capital investments — are proving difficult to absorb in a slower-growth environment. Tariff-related uncertainty and cautious consumer sentiment continue to complicate matters. On its most recent earnings call, management projected a low single-digit decline in full-year sales and revised its adjusted EPS guidance to a range of $7 to $9, citing macroeconomic headwinds and ongoing weakness in discretionary categories.
While Target still benefits from strong brand equity, loyal customers, and a nationwide footprint, the company faces multiple near-term challenges. Persistent cost pressure, declining traffic and softness in higher-margin categories are likely to weigh on its performance through the rest of 2025. Until economic conditions improve and discretionary demand rebounds, Target’s recovery may remain gradual and uneven.
How Does the Zacks Consensus Estimate Compare for WMT & TGT?
The Zacks Consensus Estimate for Walmart’s fiscal 2026 EPS remains steady at $2.59 over the past seven days, reflecting a projected year-over-year growth of 3.2%.
WMT’s Estimate Revision Trend
Image Source: Zacks Investment Research
In contrast, the EPS estimate for Target for fiscal 2025 has moved down 9.6% to $7.72 in the past seven days, indicating a year-over-year decline of 12.9%. This divergence underscores a more favorable earnings outlook for Walmart compared to Target. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
TGT’s Estimate Revision Trend
Image Source: Zacks Investment Research
Price Performance & Valuation of WMT & TGT
Over the past 12 months, Walmart stock has delivered an impressive 47.3% return, significantly outpacing the broader S&P 500 Index, which rose 9.3% during the same period. In sharp contrast, Target has experienced a 35.1% decline in its stock price, reflecting investor concerns over earnings and operational headwinds.
From a valuation standpoint, Walmart currently trades at a forward price-to-earnings (P/E) ratio of 35.82x. Meanwhile, Target trades at a more modest forward P/E of 12x amid operational challenges and weaker earnings visibility.
The combination of strong price momentum and a premium valuation for Walmart signals a bullish market outlook, backed by consistent earnings performance and defensive sector positioning.
Image Source: Zacks Investment Research
Conclusion
While Target has made progress through strategic investments in digital capabilities and store enhancements, its near-term outlook remains clouded by ongoing margin pressures, weak discretionary demand, and cautious consumer spending. In contrast, Walmart continues to position itself as a more stable retail investment in 2025, driven by consistent earnings growth, strong omnichannel execution, and rising contributions from high-margin segments like advertising and memberships, reinforcing investor confidence in its ability to navigate a challenging economic environment.
WMT currently carries a Zacks Rank #3 (Hold), while TGT carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.