Walmart's Two Earnings Measures Landed a Penny Apart. That Took a $0.12 Investment Loss and a $0.11 Tax Benefit Cancelling Out.

Walmart reported the July quarter this morning. Revenue was $187,937 million, up 5.9% and 5.1% in constant currency. Operating income was $9,383 million, up 28.8%. GAAP diluted EPS was $0.80; adjusted EPS was $0.81, against a consensus of $0.74.

We previewed this print four hours before it landed, and the whole piece was about one thing: the gap between the two earnings measures had ranged 41 cents across four quarters, changed sign twice, and could not be forecast by anyone. It came in at one cent. That looks like the argument collapsing. It is the opposite.

What we learned

1. A one-cent wedge took two twelve-cent items to produce. The release states it plainly: adjusted EPS "excludes the impact, net of tax, from a net loss of $0.12 on equity and other investments, and net benefit of $0.11 from a certain tax matter." The gap was not small because the adjustments were small. It was small because a loss and a benefit of almost identical size landed in the same three months facing opposite directions. Anyone who had forecast a penny would have been right for reasons they could not have known.
2. The tariff refunds the guidance excluded arrived, and they are in the gross margin. Walmart's 21 May guide explicitly assumed no IEEPA refund impact — our preview flagged that as the line to watch. Gross profit rate rose 96 bps, which the release attributes primarily to tariff refunds, and the company says that setting aside their net impact, underlying operating income growth was "at the top end of our guidance" rather than the headline +28.8%. Two different numbers, and Walmart is the one distinguishing them.
3. The raise was real, on every line. Full-year adjusted EPS goes from $2.75–2.85 to $2.80–2.87, net sales from +3.5–4.5% to +4.0–5.0% constant currency, adjusted operating income from +6.0–8.0% to +7.0–8.5%. Our preview named exactly this as the clean positive: "a quarter delivered inside guidance while the year is left alone is a hold, however the morning trades."
4. The earnings beat is an order of magnitude larger than the revenue beat. Adjusted EPS beat by 9.5%; revenue beat by 0.7%. A company growing revenue 5.9% does not produce a 9.5% earnings beat from operations in one quarter, and the release tells you where the difference sits.
5. The high-margin attach businesses are growing six times the company. Global advertising +38%, membership fee revenue +17%, eCommerce +23%, against total revenue of +5.9%. That mix shift, not the tariff line, is what makes a 96bps gross margin gain repeatable.

The number that fell while everything rose

Consolidated net income attributable to Walmart was $6,366 million, down 9.4%, in a quarter where operating income rose 28.8%. Both are true and the distance between them is the $0.12 investment loss sitting below the operating line.

This is the same shape as the January quarter, when GAAP EPS of $0.53 sat 21 cents under an adjusted $0.74 on an equity-investment loss. It is why our stored series and a published consensus cannot be subtracted from one another, and why our own earnings pages now compare on the basis the consensus was set on rather than the basis we happen to store.

What to watch

1. Whether the remaining tariff refunds keep going into price. The release says the outlook "reflects the continued prioritization of remaining tariff refunds into price investments" — so the benefit is being spent, not banked, and the size of what is left is not disclosed.
2. Q3 adjusted EPS of $0.62–0.64 against $0.62 a year earlier. The guide implies roughly flat, which is a striking thing to publish in the same release as a raised full year.
3. The advertising line at 38%. Two more quarters at that rate makes it a material share of gross profit rather than a growth statistic.
4. Free cash flow. $5.5 billion year to date, down $1.4 billion, with capital expenditure of $14.2 billion in six months.
5. The next wedge. On this evidence it is not converging on anything. Five quarters: +$0.20, +$0.15, −$0.21, +$0.01, −$0.01.

Every reported figure — total revenues of $187,937M against $177,402M, cost of sales of $138,804M, operating income of $9,383M, consolidated net income attributable to Walmart of $6,366M, GAAP diluted EPS of $0.80, adjusted EPS of $0.81, the $0.12 after-tax net loss on equity and other investments and $0.11 net benefit from a certain tax matter, the 96bps gross profit rate gain, +23% eCommerce, +38% advertising, +17% membership fee revenue, +2.6% Walmart U.S. comparable sales, six-month free cash flow of $5.5B down $1.4B, six-month capital expenditure of $14,181M, and all Q3 and FY2027 guidance — is from Exhibit 99.1 of Walmart's Form 8-K filed 20 August 2026, accession 0000104169-26-000145, captured in full in our July-quarter note. The prior guidance of $2.75–2.85, +3.5–4.5% and +6.0–8.0% is from the first-quarter release of 21 May 2026. The $0.74 adjusted EPS and ~$186.7B revenue consensus are press-reported from third-party estimate feeds and are not series this site stores or verifies. GAAP diluted EPS of $0.88, $0.77, $0.53 and $0.67 for the four prior quarters are our stored series; the adjusted figures beside them are Walmart's own from the corresponding releases. Derived here: gross profit of $49,133M and the 26.14% margin, every wedge figure, the +9.5% and +0.7% surprises, and the July-quarter free cash flow of $7,446M implied by the six-month figure less the April quarter's −$1,946M. This site holds no valuation model for Walmart, and no share price or market-capitalisation figure appears here.