What happened

Shares of Walmart (NYSE:WMT) were tumbling today after the retail giant posted disappointing results in its fourth-quarter earnings report. Growth in the hot e-commerce division slowed and the company reported a lower-than-expected profit for the key holiday quarter. As of 11:01 a.m. EST, the stock was down 9.8%.

A Walmart employee stocks items in the produce section.

Image source: Walmart.

So what

The stock's slide may have had more to do with inflated expectations than weakening performance as strong comparable sales (comps) continued. At Walmart U.S. stores, comps were up 2.6% on a 1.6% increase in traffic, and the chain reported its best two-year comparable-sales growth in eight years at 4.4%. Sam's Club, meanwhile, saw comp sales increase 2.4% with traffic up 4.3%. 

Still, U.S. e-commerce sales growth slowed to just 23%, down from 50% in the third quarter, as the company lapped its acquisition of Jet.com in the third quarter of 2016. Overall revenue increased 4.1%, or 3.1% in constant currency to $136.3 billion, topping analyst estimates of $135 billion. However, adjusted earnings per share did not grow as fast expected, improving from $1.30 to $1.33, but missing estimates at $1.36.

CEO Doug McMillon said the company had "good momentum" and "solid sales growth" across its three divisions: Walmart U.S., Sam's Club, and Walmart International.

Now what 

Despite the slowdown in e-commerce sales, management was still optimistic about the current year, sticking with its prior guidance of 40% online sales growth. The company forecast EPS of $4.75-$5.00 in fiscal 2019, up from $4.42 last year, and expects solid comparable sales growth to continue, projecting an increase of 2% at Walmart U.S. stores.

With the company still projecting robust growth for the coming year, it seems like investors could be taking profits following the stock's 43% gain in 2017. 

At the high end of its earnings guidance, Walmart shares now trade at a forward price-to-earnings of less than 20. If management can execute on that guidance, the stock should gradually recover.