Given yesterday’s news, it’s not hard to understand why shares of Walmart (NYSE:WMT) ended Thursday’s trading more than 3% in the red, while Target (NYSE:TGT) shares gained nearly 2%: Walmart missed its third-quarter estimates, while Target topped its Q3 expectations.

The market — with its usual black-and-white mind-set — is rewarding one at the expense of the other. As they say, though, there’s always more to the story.

By the Numbers

For the third quarter, Target earned 81 cents per share, topping estimates of 78 cents. Revenue came in as expected, at $16.93 billion. Target put a cherry on top of the already-good results by saying Q4 would likely generate per-share earnings of somewhere between $1.64 and $1.74, which is remarkably better than the $1.51 analysts had previously expected.

At the other end of the spectrum, Walmart earned $1.08 per share, topping expectations of $1.07, but revenue of $113.2 billion didn’t quite meet the anticipated top line of $114.9 billion. Worse, Walmart lowered its fourth-quarter profit outlook to something between $1.53 and $1.58 per share, versus prior expectations of $1.59.

In that light, the selling pressure on WMT and the buying pressure bidding TGT makes perfect sense. But what if analyst expectations were unfair and obscured other key facts?

As it turns out, that might just be the case.

Some Perspective

There’s no denying it: Walmart missed and Target beat. In fact, both retailers also notified investors that, barring any changes to the estimates, they’d do the same again for the current quarter.

Yet, based on the numbers that matter, one could still argue that that Walmart is the superior investment.

Yes, Target topped earnings estimates … but it also fell short of last year’s comparable EPS of 82 cents. And, though the company is growing its bottom line, 2012’s projected income is only 10% higher than 2011’s. The 2013 per-share income outlook is only 2.6% stronger than 2012’s likely bottom line. Analysts only foresee TGT growing the bottom line at an annual pace of 9.8% during the next three years.

Meanwhile, Walmart cranked up its per-share Q3 income from 97 cents a year earlier to $1.08 this time around — an 11.3% increase. Even if it does “only” earn $1.53 in Q4, that’s still 6.2% better than the profit Walmart posted in the Q4 2011. All told, Walmart is on pace to grow its income by 9.7% this year, and by 9.5% next year. That’s just as solid as Target’s growth projection, and for about the same price — the P/E ratios (trailing and forward-looking) are roughly the same for both retailers.

Moral of the story? Perception is everything, at least in the short run. If analysts simply overestimated Walmart’s capacity (through no fault of the company’s management), then that’s just too bad for WMT shareholders.

There’s still one more wrinkle to this story, though.

Food for Thought

Don’t misunderstand. Investors have plenty of reason to hate Walmart and love Target today. It’s just that none of them can fairly be based on trailing or projected results alone.

Rather, the real worry for Walmart owners might be the fact that it and McDonald’s (NYSE:MCD) both waved red flags regarding third-quarter numbers.

The parallels between the two companies are stronger than you might think. Both are the biggest players in their respective arenas, and both got to be that way largely by being a low-price leader. Both actually benefited from the financial crunch that went into effect in 2008, as consumers began to cut spending however they could, as much as they could. Meals at McDonald’s are cheaper than a steak dinner, and nearly everything is cheaper at Walmart than it is anywhere else.

Yet, like Walmart, McDonald’s loudest alarm bell in October had nothing to do with estimates, and everything to do with the fact that same-store sales fell last month — for the first time since 2003.

People, rather than circumstances, got the blame; McDonald’s president of U.S. operations, Jan Fields, has been replaced on the heels of the disappointing month (though the struggle had started well before last month).

However, one has to wonder if there’s something bigger — and beyond control — going on here. Is it possible that “dirt cheap” is out and “merely frugal” is back en vogue? That might be the bigger worry for Walmart shareholders at this point.

Again, though, that’s just a possibility. Except for estimates, there’s nothing actually in the numbers so far that says Walmart’s in trouble.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.