Equities Weekly Outlook: Walmart, Home Depot and Target

Three major U.S. retailers report earnings this week, with Walmart, Home Depot and Target offering different views on the strength of the U.S. consumer.

For Walmart, the focus will be on sales growth, any evidence of trading down, margins and the performance of its increasingly important e-commerce and advertising businesses. Home Depot will provide a useful read on demand for big-ticket purchases and home improvement, while Target faces a tougher test as consumers remain cautious around discretionary spending.

Walmart Q2 Earnings Preview

Walmart, the U.S.'s largest retailer, will release Q2 earnings on Thursday. Expectations are for EPS of $0.74 on $186.7 billion in revenue.

The health of the US consumer will be one of the key issues heading into Walmart's Q2 results, particularly after U.S. retail sales fell 0.6% month-to-month in July, the first decline in nine months, although some of that was due to lower gasoline prices and the timing of Amazon Prime Day.

For Walmart, the key question will be whether consumers are cutting spending or becoming more value-conscious. A weaker consumer may actually be beneficial for Walmart if shoppers trade down from more expensive retailers.

Elevated inflation may also be a headwind for Walmart. Higher food prices put pressure on households' disposable income, potentially reducing spending on discretionary goods. Attention will be on whether Walmart can maintain its price advantage while protecting margins.

Margins are one of the biggest risks. Walmart has been using its scale and pricing power to attract consumers, but higher fuel and other costs could put pressure on operating margins. Q2 operating income growth of 7% to 10% is expected.

Meanwhile, the trade-down effect could be a positive micro driver for Walmart. If consumers become more cautious about inflation, higher borrowing costs, and weak sentiment, they may trade down from premium retailers to Walmart. This makes Walmart relatively defensive in a weakening consumer environment.

Attention will also be on global e-commerce, which grew 26% in the first quarter. Another strong number would support the investment case for Walmart as its digital business becomes increasingly important.

Global advertising revenue grew 36% in Q1, while marketplace sales jumped almost 50%. Membership fee revenue also remains strong.

These alternative revenue streams could help improve profitability even if core U.S. comparable sales growth remains within the 3% to 4% range.

The biggest potential share price catalyst could be full-year guidance. Walmart is currently guiding for full-year 2027 EPS of $2.75 to $2.85 and constant-currency sales growth of 3.5% to 4.5%.

Interestingly, the share price is trading around $116, which looks relatively weak given the underlying growth.

How to Trade WMT Earnings

On the weekly chart, Walmart rose to a record high of 135 before falling back towards 107, around the 50% Fibonacci retracement of the 79 low to the 135 high.

The price is attempting to recover above the 50 EMA and the 38.2% Fibonacci level at 114.

A rise above 114 would bring 122 into focus, the 23.6% Fibonacci level, before attention turns back towards 135.

On the downside, sellers would need to break below 107 to create a lower low and extend the move towards 100, the 61.8% Fibonacci retracement level.

Home Depot Earnings Preview

Home Depot will report Q2 earnings on Tuesday, August 18, before the market opens. Consensus estimates are for EPS of $4.73, compared with $4.68 in the same quarter last year.

Q1 was a fairly soft quarter. Revenue increased 4.8% to $41.8 billion, but comparable sales rose only 0.6%, while EPS fell to $3.43 from $3.56.

These numbers will be important not only for Home Depot but also for the broader consumer outlook. Consumers have been delaying expensive projects such as kitchens, bathrooms and major renovations.

U.S. consumer sentiment deteriorated around the start of the Middle East conflict before recovering across June and July, but has started to deteriorate again in August as concerns over inflation linked to the Middle East weigh on sentiment.

However, management entered Q2 fiscal 2026 encouraged by consumer engagement and favourable weather in early May, which restored some spring productivity. Sales of patio, grills and outdoor power equipment could also support revenue.

Still, underlying demand remains constrained by high mortgage rates, weak housing turnover and consumer uncertainty.

It is also worth remembering that a revenue beat would not necessarily be impressive if margins deteriorate. Margins could remain under pressure from higher fuel, commodity and tariff-related costs.

Another issue to watch is CEO Ted Decker, who took temporary medical leave just days before the earnings announcement. The announcement contributed to a decline in HD shares.

Home Depot shares have gained 15% over the past three months, compared with 12% growth for the industry. The stock has also outperformed the S&P 500 and the retail wholesale sector, which have gained 3.2% and 0.8%, respectively.

How to Trade HD Earnings

HD has traded within a descending channel dating back to September 2025 on the weekly chart.

The price recovered from the 2026 low of 294, around the lower band of the falling channel, and moved back above the 200-week EMA before running into resistance at 360, the upper band of the channel.

Buyers would need to break above 360 to create a higher high and bring 393, the February 2026 high, into focus.

On the downside, sellers would need to break below the 200-week EMA around 330 to turn attention towards 313, the midpoint of the falling channel, and 287, the 2026 low.

Target Q2 Earnings Preview

Target will release second-quarter earnings on Wednesday, August 19, before the market opens.

Expectations are for EPS of around $2.25, marking a 9.8% year-over-year increase, on revenue of $26.1 billion, up 3.4% from the same quarter last year.

The earnings come after U.S. retail sales fell 0.6% month-on-month in July, marking the first decline in nine months and coming in substantially weaker than expected.

This matters for Target because its consumer is particularly exposed to discretionary spending across apparel, home, beauty and general merchandise.

The key question will be whether consumers continued to spend reasonably strongly during May to July, or whether we are starting to see the beginning of a more meaningful slowdown.

Management's comments on lower-income and middle-income consumers will therefore be important.

It is also worth noting that headline CPI has eased but remains well above the Fed's 2% target at 3.4% in July. Higher essential costs are still absorbing a large portion of household budgets, leaving less money available for discretionary purchases at Target.

Margins will be another major focus, particularly tariffs. Higher tariffs can increase product costs and put pressure on gross margins.

The question is not simply whether Target raises prices. It is whether the company can pass those costs on without damaging volumes. That is particularly important given that Target's Q2 2025 gross margin fell to 29% from 30% a year earlier.

Q2 results will therefore be less about whether Target beats EPS by a few cents and more about whether the improvement seen in the first quarter is sustainable, particularly given the deterioration in consumer sentiment heading into the current quarter.

How to Trade TGT Earnings

Target recovered from the 82 2025 low and has since traded within a rising channel, reaching current levels around 154.

The 50 EMA is on the verge of crossing above the 200 EMA, creating a potential golden cross signal.

Buyers will look to break above 154, bringing 166, the 2024 high, into focus.

On the downside, support can be seen at 130.5, around the lower band of the rising channel.

A break below here would expose the 200 EMA at 121.

It would take a break below 82 to create a lower low and change the broader structure of the chart.