Please ensure Javascript is enabled for purposes of website accessibility

Why Walmart Stock Popped Today

By Jeremy Bowman - Aug 15, 2019 at 6:46PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of the retailer were gaining after it aced its latest report.

What happened

Shares of Walmart (WMT -6.72%) were surging today after the retail giant turned in an all-around strong second-quarter earnings report, showing that its investments in e-commerce and grocery-pickup infrastructure are paying off.

The stock closed up 6.1%, marking its biggest gain in nearly two years.

A Walmart truck on the highway.

Image source: Walmart.

So what 

Comparable sales at Walmart U.S. stores rose 2.8% and were up 7.3% on a two-year stacked basis, the segment's best two-year comps growth in more than 10 years. E-commerce accounted for half of the same-store sales growth as e-commerce sales in the division were up 37%, driven by strong growth in online grocery. Walmart now has 2,700 grocery pick-up locations, 1,100 stores doing grocery delivery, and said its NextDay delivery program covers 75% of the U.S. population. 

At Sam's Club, comps were up 1.2%, or 4.2% excluding tobacco, as some locations stopped selling tobacco last year. Internationally, revenue rose 3.3%, to $30.4 billion in constant currency, but operating income fell from $1.3 billion to $0.9 billion due to last year's acquisition of Flipkart.

Overall revenue rose 1.8%, to $130.4 billion, slightly ahead of estimates at $130.1 billion. Adjusted earnings per share slipped, again owing to the Flipkart acquisition, from $1.29 a year ago to $1.27, but that also beat expectations at $1.22.  

CEO Doug McMilllon said: "From a performance point of view, we're pleased with the strength we see in the business. Customers are responding to the improvements we're making, the productivity loop is working, and we're gaining market share."

Now what

Walmart also lifted its guidance for the year after the better-than-expected quarter. The retailer said comparable sales would be at the upper end of its previously stated 2.5%-3% range, and it raised earnings-per-share (EPS) guidance, now forecasting flat profit growth including Flipkart, or a mid-to-high single-digit growth excluding Flipkart. 

Walmart's quarter and guidance raise should again quell any concerns about the impact of tariffs, the trade war, or competition from Amazon following that company's launch of free Prime one-day delivery. With its ongoing expansion of online pickup and delivery sites, as well as its NextDay service, Walmart is in the midst of a growth cycle that should continue to pay off, supporting strong e-commerce growth and solid all-around performance.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
$122.53 (-6.72%) $-8.82

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.