Walmart (WMT) looked unstoppable this spring. But by early July, its performance had significantly declined.
The retail giant’s shares have fallen from a 52-week highnear $135toabout $112. The stock is now down for the year, even as the broader market keeps climbing.
A drop like that usually leaves Wall Street silent. However, Jim Cramer did the opposite.
The CNBC host captured his read on the sell-off in a single word, and it’s one that long-term investors will want to consider before they write the stock off.
Jim Cramer calls Walmart stock sell-off “excessive”
Cramer’s one-word verdict on Walmart stock? “Excessive.”
That’s how Jim Cramer described a name he believed had dropped too far and too fast. Walmart stock was down5% at one point and closed downabout 3.9% that day, according to Yahoo Finance.
Cramer dismissed the argument that cheaper gas would pull value shoppers away from Walmart, calling that idea “nonsense.”
His reasoning was simple. The stock had fallen about 26 points from its high and was trading near 37 times earnings. That’s a drop he said “feels excessive.”
Cramer added that rival retailer TJX’s decline looked just as excessive, the Foreign Policy Journal reported.
Marvin Samuel Tolentino Pineda / Getty Images
What triggered Walmart’s slide from record highs
Walmart’s trouble began with an earnings report that the market did not like.
According to CNBC, on May 21, the company reported first-quarter fiscal 2027 results. The revenue beat expectations, but profit only met them.
Walmart’s U.S. comparable sales also rose 4.1%, and e-commerce jumped 26%, based on Walmart’s earnings release.
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The problem was guidance. Management left its full-year outlook unchanged instead of raising it. That forecast also came in below Wall Street’s estimates, SEC filings show.
Rising fuel costs were another worry. They cut into Walmart’s distribution and fulfillment expenses. It was a roughly $175 million hit that affected shoppers’ budgets, too.
Even with the stock already trading near 48 times earnings, the news sent shares down about 7.3% in a single session, TradingView noted. Consequently, Walmart closed at $121.34.
The bull case Cramer sees in Walmart stock
Cramer’s confidence rests on a business that kept delivering while the stock fell.
According to Insider Monkey, he noted Walmart matched expectations on U.S. comparable-store sales and grew earnings 8% compared to last year.
Related: Walmart figured out how to sell you to advertisers for $6 billion
Cramer’s main point is that Walmart tends to pull in customers from weaker retailers when household budgets tighten, turning downturns into market share.
Why Cramer still backs Walmart:
- Same-store sales held at the expected 4.1%.
- It gains share when consumers trade down to lower prices.
- He sees the gas-price bear case as overblown.
- He views the drop as a rare chance to buy at a discount.
How Walmart stock stacks up against the S&P 500
As of late June, the S&P 500 was up about 7.5% for the year, while Walmart slid the other way.
Walmart versus the broad market:
- Past five days: WMT down about 4.3%.
- Past six months: WMT down about 2.2%.
- Year to date: WMT is down 3.23% YTD against a single-digit gain of about 9% for the S&P 500.
What Walmart investors should weigh before buying the dip
A lower price tag doesn’t automatically make Walmart a bargain.
Even after the drop, the stock trades near 39 times earnings and remains down for the year. That doesn’t leave much room for error if consumer spending slows or the next earnings report disappoints.
Walmart’s dividend yield is under 1%, so investors aren’t getting paid much to sit and wait.
What still needs to go rightfor Walmart stock:
- Oil and gas prices stay contained, easing consumer pressure.
- U.S. comparable sales hold near recent levels.
- Management lifts guidance at the next report, due Aug. 20.
Cramer’s call is a reason for long-term holders to stay patient. However, it is not a guarantee of gains.
A dip only rewards buyers when the business behind it keeps growing, and Walmart still has to prove that quarter by quarter.
Related: Walmart adds service to rival DoorDash, UberEats
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