Walmart has experienced steady growth, with its stock up 14% in 2025, while Target’s stock has declined by 30%. Walmart is expected to report a 4% increase in sales to $177.14 billion for Q3, with an EPS rise of 5% to $0.61. In contrast, Target’s Q3 sales are projected to decrease by 1% to $25.36 billion, with a 5% drop in EPS to $1.76.

In recent years, Walmart has successfully expanded into e-commerce and other high-margin businesses, with its digital sales exceeding $100 billion annually, contributing to over 100% gains in the past five years. Target has faced challenges with weaker sales growth and less resilience to spending shifts, resulting in a 45% stock decline during the same period.

Target’s stock trades at a discount to both the S&P 500’s and the Zacks Retail and Wholesale sectors’ forward earnings multiples. Walmart’s stock trades at a premium, supported by its EPS growth. Both stocks trade at less than 2X their price to forward sales ratio.

As dividend kings, Walmart and Target have consistently increased their payouts for 50 years. Walmart’s steady expansion makes it appealing for long-term stock appreciation, while Target offers a higher dividend yield of 5.07% compared to Walmart’s 0.92%.

With earnings reports just days away, we are looking at a clear divergence between Walmart and Target. As of today, November 18, 2025, Walmart’s stock has climbed 14% this year while Target has fallen a steep 30%. This presents a classic setup for options traders betting on momentum or a reversal.

For Target, which reports tomorrow, expectations are already low with both sales and earnings projected to decline. The company has a history of missing earnings estimates, which could tempt traders to buy puts in anticipation of another disappointment. Recent government data showed retail sales growth slowed to just 0.2% last month, suggesting consumers are pulling back on discretionary items that are core to Target’s business.

However, with the stock already down significantly, much of the bad news may be priced in, creating the potential for a sharp rally on any positive surprise. Implied volatility on Target’s options is currently elevated, pricing in a potential move of over 8% in either direction. This makes a straddle, buying both a call and a put, a viable strategy for those who expect a big move but are unsure of the direction.

Walmart reports on Thursday, and its situation is the opposite, as it trades at a high valuation justified by strong performance. Its stock is priced for perfection, meaning even a solid report that doesn’t exceed high expectations could trigger a sell-off. Looking back at its Q2 2025 report, we saw the stock dip nearly 5% despite beating revenue forecasts, simply because earnings per share missed by a few cents.

Given its premium, buying protective puts or implementing a bear call spread could be a prudent way to play Walmart’s earnings. While recent consumer sentiment reports show an improvement to 78.8, shoppers remain highly focused on value, which helps Walmart’s grocery-heavy model. However, any sign of slowing e-commerce growth or weakening guidance could quickly deflate the stock’s high multiple.

For any directional bet on these names, we must remember that the high implied volatility before the reports will collapse immediately after the news is released. This “IV crush” erodes the value of options, making it critical to be right not only on the direction but also on the magnitude of the stock’s move. Selling premium through strategies like credit spreads could be an alternative for those who believe the market is overestimating the potential post-earnings volatility.