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Why Walmart Inc Stock Jumped Today

By Jeremy Bowman – Aug 16, 2018 at 2:57PM

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Shares of the retail giant surged on impressive second-quarter results.

What happened 

Shares of Walmart Inc. (WMT 0.21%) are moving higher today after the company turned in an all-around stellar second-quarter earnings report. The retailer posted its best comparable-sales growth in more than a decade and raised earnings guidance, as the company is executing across the board and riding strong growth in the industry. As of 2:47 p.m. EDT, the stock was up 9.7%.

So what

Comparable sales jumped 4.5% in the quarter, driven by growth in traffic, average transaction, and e-commerce. At Sam's Club, its membership-based club chain, same-store sales were up 5%, its fastest growth in six years, and  comparable sales in its four biggest international markets were also positive. U.S. e-commerce growth, which was a pain point two quarters ago, was back up to 40%, keeping pace with guidance for the year. 

A Walmart employee placing vegetables on display.

Image source: Walmart.

Overall revenue was up 3.8% to $128 billion, exceeding analysts' consensus estimate of $126 billion. Though currency-neutral operating income fell from $6 billion to $5.7 billion, that was expected as the company invests in higher wages and e-commerce, with its number of grocery pickup locations now reaching 1,800. 

CEO Doug McMillon said, "We're pleased with how customers are responding to the way we're leveraging stores and e-commerce to make shopping faster and more convenient. We're continuing to aggressively roll out grocery pickup and delivery in the U.S., and we recently announced expanded omni-channel initiatives in China and Mexico."

Now what

On top of the strong quarter, Walmart said it would raise its earnings and comparable-sales guidance for the year. Management now sees comparable sales increasing 2%, up from a previous forecast of 1.5% to 2%, and expects adjusted EPS of $4.90 to $5.05, compared to prior guidance of $4.75 to $5.

Beyond the strong results, Walmart is making smart decisions by reorienting its international portfolio toward growth, as it did with its purchase of a majority stake in Flipkart. 

Walmart is making all the right moves in an already strong retail environment. It's not surprising to see the stock surging today.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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