ETFs to Watch as Walmart Shares Slip Despite Q4 Earnings Beat

Shares of Walmart Inc. WMT slipped 1.4% yesterday, following the company’s better-than-expected fourth-quarter fiscal 2026 results. Despite comfortably surpassing analysts’ estimates for earnings and revenues, the retail giant’s stock tumbled at the bourses, most likely owing to its earnings outlook for fiscal 2027, which fell short of Wall Street’s expectations. 

This pullback might encourage investors to perform a dip purchase in WMT, especially those who would like to capitalize on the retail giant’s expanding e-commerce sales growth momentum. 

However, one must be mindful of the fact that Walmart is facing a potentially less favorable sales mix. While its total sales climbed up, the majority of this growth was driven by low-margin grocery items as inflation-weary shoppers pivoted away from higher-margin discretionary categories. This shift, combined with potential impacts of global trade uncertainties like new tariffs, suggests that Walmart's path to sustained profitability may be volatile. 

Against this backdrop, investors seeking to benefit from WMT’s growth in e-commerce and advertising business, while avoiding the stock’s idiosyncratic risk, may consider investing in exchange-traded funds (ETFs) with heavy exposure to this retail giant. This would give the investors exposure to Walmart’s growth while spreading risk across other leading firms from the retail and consumer staples industries.

Now, before diving into the specifics of such ETFs, let us do a detailed analysis of how Walmart performed in the fiscal fourth quarter in terms of other metrics.

A Brief Analysis of WMT’s Q4 Results

Walmart’s fiscal fourth-quarter adjusted earnings per share (EPS) beat the Zacks Consensus Estimate by 1.4%, while its revenues topped the consensus mark by 0.3%. On a year-over-year basis, the company delivered a solid performance, with its top line rising in mid-single digits, whereas its bottom line surged in double digits.

All three of its segments registered profit growth faster than sales growth for the quarter.

Apart from witnessing solid double-digit growth in its e-commerce sales, Walmart observed strong expansion in its advertising business, which grew 37% year over year, in the reported quarter. 

Meanwhile, Walmart’s consolidated membership income increased over 15%, reflecting strength in Sam's Club in China, which registered more than 35% growth.

Its adjusted operating income grew by double digits on a year-over-year basis, thanks to strong sales growth, higher gross margins and membership fee revenues. Operating income benefited from expense leverage and improved economics in e-commerce. 

Its fiscal 2026 results reflected strong inventory management. Notably, WMT’s inventory increased 2.6% in constant currency or approximately half the rate of sales growth for the full year. 

In fiscal 2027, Walmart’s management expects the eCommerce business to continue to be its primary driver of growth with modest increases from store and club sales across the enterprise. WMT also projects to witness continued margin expansion driven by favorable business mix, automation benefits and productivity, along with fewer headwinds from merchandise category mix.

The company expects to generate earnings in the range of $2.75-$2.85 per share in fiscal 2027, lower than the Zacks Consensus Estimate of $2.93.  

Walmart-Heavy ETFs to Watch

Considering the aforementioned discussion, if you want to capitalize on Walmart’s momentum while maintaining a balanced portfolio, keep the following ETFs on your watchlist:

State Street Consumer Staples Select Sector SPDR ETF XLP 

This fund, with assets under management (AUM) worth $17.20 billion, offers exposure to 36 companies from consumer staples, distribution & retail; household products; food products; beverages; tobacco; and personal care products industries in the United States. WMT holds the first spot in this fund, with 11.39% weightage. 

XLP has gained 6.7% over the past year. The fund charges 8 basis points (bps) as fees. It traded at a volume of 18.45 million shares in the last trading session. 

Vanguard Consumer Staples ETF VDC 

This fund, with net assets worth $7.7 billion, offers exposure to 105 companies that manufacture and distribute food, beverages, and tobacco, as well as producers of nondurable household goods and personal products. WMT holds the first spot in this fund, with 15.03% weightage. 

VDC has rallied 6.8% over the past year. The fund charges 9 bps as fees. It traded at a volume of 0.18 million shares in the last trading session. 

Fidelity MSCI Consumer Staples Index ETF FSTA 

This fund, with net assets worth $1.39 billion, offers exposure to 97 consumer staples companies. WMT holds the first spot in this fund, with 14.95% weightage. 

FSTA has gained 6.5% over the past year. The fund charges 8 bps as fees. It traded at a volume of 0.18 million shares in the last trading session. 

VanEck Retail ETF RTH 

This fund, with net assets of $263.5 million, offers exposure to 26 companies involved in retail distribution, including wholesalers; online, direct mail, and TV retailers; multi-line retailers; specialty retailers; and food and other staples retailers. WMT holds the second spot in this fund, with 12.50% weightage. 

RTH has rallied 11.9% over the past year. The fund charges 35 bps as fees. It traded at a volume of 0.005 million shares in the last trading session.


 

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This article originally published on Zacks Investment Research (zacks.com).

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