Walmart CEO Says Gas Prices are “Stress Point” for Consumers. Should You Buy the Stock?

Higher fuel prices resulting from the Iran war have had a significant impact on the global economy. The rise in gasoline and diesel prices has led to increased costs across various sectors, including business inventory, supplies, delivery, and freight shipping. This surge in fuel prices has been particularly challenging for lower-income individuals, who are disproportionately affected by the higher cost of gas.

One major retailer feeling the pinch of higher gas prices is Walmart (NASDAQ: WMT). With a customer base that primarily consists of lower-income households, Walmart is vulnerable to the adverse effects of increased fuel costs. As customers are forced to allocate more of their budget towards fuel, their discretionary spending at Walmart may decrease.

According to Walmart CEO John Furner, rising fuel prices have become a significant stress point for U.S. households. This has been reflected in Walmart’s stock performance, which has seen a modest 5% gain year-to-date, underperforming the S&P 500 index.

During Walmart’s recent earnings call, Chief Financial Officer John David Rainey noted a concerning trend among the company’s lower-income customers. He mentioned that the number of gallons customers were filling up with at Walmart fuel stations had dropped below 10 for the first time since 2022. This indicates that customers are trying to ration their gasoline, highlighting the financial strain caused by high gas prices.

Walmart’s stock has declined by approximately 11% since the earnings report on May 21. The company’s guidance for the fiscal year 2027 fell short of investor expectations, with lower projected net sales and adjusted earnings per share. With a trailing 12-month price-to-earnings ratio of 41.16, Walmart appears to be richly valued compared to other major indexes like the Invesco QQQ Trust (NASDAQ: QQQ).

Despite Walmart’s efforts to expand into e-commerce and attract higher-income customers, the company remains susceptible to a slowdown in sales if gas prices remain high throughout 2026. Given the current high valuation and uncertainty surrounding fuel prices, Walmart may not be an attractive investment option unless investors are willing to hold the stock for an extended period.

In conclusion, while Walmart continues to navigate the challenges posed by higher gas prices, potential investors should carefully consider the implications of ongoing fuel price fluctuations on the company’s performance. It is essential to weigh the risks and rewards before deciding to invest in Walmart stock.