Jim Cramer Urges Patience on Walmart, Says Post-Earnings Dip Makes It a Buy

Jim Cramer may have been early with his call on Walmart (NYSE: WMT), but he isn't backing away. The Mad Money host told viewers to remain patient and buy the retail giant's stock, arguing that it had become too cheap to ignore and that he saw limited downside from a valuation standpoint. The timing, however, was rocky. Walmart's shares later closed 9% lower on Aug. 20 after the company delivered its fiscal second-quarter earnings report. Investors who bought after Cramer's remarks on Aug. 17 found themselves facing a deeper dip before the story became clearer.

Walmart's earnings release was a mixed bag. The company beat analyst estimates on both revenue and earnings for its fiscal Q2, with revenue up 5.9% year over year. Global e-commerce sales jumped 23%, far outpacing overall sales growth. Walmart also noted that 50% of U.S. marketplace volume now flows through its fulfillment services, and reports indicate its digital advertising business is growing at a 26% annual clip. The market, however, focused on the outlook. Walmart's third-quarter guidance for revenue growth and EPS fell short of consensus, and management warned of $2 billion in incremental fuel costs for fiscal 2027, along with a dip in free cash flow. That combination roiled investors, even as Cramer remained constructive.

The year-to-date picture underscores the split: Target is up about 64%, while Walmart is down roughly 8%. Target's most recent quarterly report showed revenue growth of 5.3%, comparable sales growth of 2.7%, digital comparable sales growth of 8.7%, and a 20% jump in non-merchandise revenue. Shares closed 4.3% higher in response. The company's aggressive price cuts have helped draw traffic into stores, but inflation is still weighing on discretionary spending. Inflation-weary shoppers have also shifted to lower-priced stores, creating headwinds for Target's electronics and other discretionary categories. Morningstar notes that Target's Q3 earnings guidance of $2.10 to $2.40 per share depends heavily on consumer spending, and the company's decision to narrow its full-year comparable-sales growth outlook to 0% to 2% suggests management is bracing for slower demand.

Valuation is where the two stocks decouple even further. Walmart trades at a forward P/E of roughly 35.6, sharply above Target's 18.9. Short interest as a percentage of float is higher for Target, at 3.64%, while hedge fund sentiment runs in Walmart's favor: 99 funds held a stake in WMT at the end of Q1, versus 68 for TGT.

For investors, the takeaway isn't simply which retailer wins the sales race. It's about how each company's strategy holds up under sustained consumer pressure. Walmart's e-commerce acceleration and advertising business are promising, but translating those gains into durable earnings remains a work in progress. Target's momentum, on the other hand, could slow if shoppers keep trading down. As Cramer has said, patience may be required — for both stocks and the investors watching them.

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