Target vs Walmart: Which is the better retail stock ahead of Q3 results?

It’s been hard to overlook Walmart’s (WMT) steady growth, while Target’s (TGT) cheaper valuation may still compel investors as a potential buy-the-dip target.

To that point, ahead of their Q3 results this week, Walmart stock is up a very respectable +14% in 2025, with Target shares down a grizzly 30%.

Seeing as past performance is not always indicative of future success, this certainly makes it a worthy topic of which retail stock may be the better investment as their Q3 reports approach.  

Target and Walmart’s Q3 expectations

Set to report on Wednesday, November 19, Target’s Q3 sales are thought to have dipped 1% to $25.36 billion. On the bottom line, Target’s Q3 EPS is expected to be down 5% to $1.76. Notably, Target has missed the Zacks EPS Consensus in three of its last four quarterly reports with an average EPS surprise of -8.44%.

As for Walmart, which reports on Thursday, November 20, Q3 sales are expected to be up over 4% to $177.14 billion. Even better, Walmart’s Q3 EPS is slated to rise 5% year over year to $0.61. Walmart has exceeded earnings expectations in three of its last four quarterly reports, with an average surprise of 2.79% despite most recently missing Q2 EPS estimates by nearly 7%.  

Walmart’s success and Target’s woes

Summarizing their contrasting stock performances, Walmart has used e-commerce to leverage its massive global scale and grocery dominance while expanding into higher-margin businesses such as advertising, memberships, marketplace services, and vertical integration in food supply chains.  

In the last five years, WMT has stellar gains of over +100% with Walmart now bringing in more than $100 billion in digital sales annually.

Meanwhile, TGT is down over 45% during this period as Target has struggled with weaker sales growth, narrower margins, and less resilience to consumer spending shifts after previously being somewhat of a Wall Street darling as it relates to retail stocks.

TGT and WMT valuation comparison

Surely attracting investor interest is that Target stock is trading at a steep discount to the benchmark S&P 500's 25X forward earnings multiple and the broader Zacks Retail and Wholesale sectors' 27X. It’s also noteworthy that TGT is trading at a 20% discount to its decade-long median of 15X forward earnings.

Walmart, on the other hand, trades at 39X forward earnings, although its EPS growth has been justifiable of a premium.

In terms of price to forward sales, TGT and WMT both trade at the often preferred level of less than 2X.

Dividend comparison and final thoughts

As dividend kings that have increased their payouts for at least 50 consecutive years, Walmart and Target are both making the argument for being viable long-term investments at their current levels.

That said, their Q3 reports will be critical to gauging if Walmart stock still has more upside or if Target’s is due for a rebound, with WMT and TGT both landing a Zacks Rank #3 (Hold) at the moment.  

Of course, Walmart’s steady expansion may make it a better long-term choice in terms of stock appreciation. Although a sharper turnaround in Target’s operational efficiency has been much needed, its reliable 5.07% annual dividend yield could still be more attractive regarding total return potential going forward compared to Walmart’s 0.92%.

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