Key Points

Walmart has boosted its dividend for 53 consecutive years, yet the yield trails the S and P 500 average.
The stock's price-to-earnings ratio sits near its five-year norm.

Walmart (NASDAQ: WMT) shares climbed steadily through early 2024 as the retailer posted steady revenue gains despite economic uncertainty.

Since reporting first-quarter 2026 results in May, the stock has dropped 24 percent. Growth has moderated, and the Dividend King status from 53 straight years of increases has not drawn income-focused buyers.

Investors now face the question of whether to purchase Walmart shares. The case here is to treat the stock as a hold for the present.

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The Walmart value proposition

Walmart stock should remain a long-term winner given its sustained competitive position.

The company has become a top omnichannel retailer. It has also moved into higher-margin areas such as digital advertising and subscriptions. At the same time, it renewed focus on supply-chain investments that cut fulfillment costs, echoing its early strategy.

These steps supported dividend growth, but prior success lifted the share price and pushed the price-to-earnings ratio to a peak of 49 earlier this year. Priced for flawless execution, the stock fell after the fiscal first-quarter report fell short of perfection.

The company grew cautious on guidance as gas prices rose. Conditions stayed similar in fiscal second quarter, with guidance for a 3 percent to 3.75 percent net-sales increase in fiscal third quarter. That outlook triggered the largest one-day decline since 2022.

The projected growth trails the first half of fiscal 2027, when revenue of 366 billion dollars rose 6.6 percent year over year. Net income for the first two quarters of 2026 reached 11.7 billion dollars, up just 2 percent as changes in equity-investment values limited earnings growth.

Under these conditions the stock's price-to-earnings ratio has moved to 37, close to its five-year average. Its 0.95 percent dividend yield also sits below the S and P 500 average of 1.04 percent, limiting appeal for income investors.

The market appears to have valued Walmart appropriately. Yet because the multiple has dipped below 30 more than once in the past five years, investors may reasonably wait for a lower entry point.

Short-term softness is unlikely to alter the long-term outlook. As the price adjusts to slower growth, a recovery could follow.

Walmart is a hold

Given current conditions, investors should likely remain on the sidelines.

The sharp drop reflects mild business softness and an uncompelling dividend yield. Buyers may view the 37-times earnings multiple as elevated for the environment.

These issues look near-term in nature. A rebound in sales growth or a multiple below 30 could signal an attractive entry.

Should you buy stock in Walmart right now?

Before purchasing Walmart shares, note the following.

The Motley Fool Stock Advisor team recently named what it views as the 10 best stocks for investors to buy now, and Walmart was not included. The 10 selected names could deliver strong returns ahead.

Netflix appeared on the list December 17, 2004; a 1,000-dollar investment then would be worth 440,710 dollars today. Nvidia joined April 15, 2005; the same 1,000-dollar stake would now equal 1,335,252 dollars.

Stock Advisor's overall average return stands at 978 percent, well ahead of the S and P 500's 213 percent gain. The latest top-10 list is available with Stock Advisor.

Will Healy holds none of the mentioned stocks. The Motley Fool owns shares of and recommends Walmart. The Motley Fool maintains a disclosure policy.