Why Walmart Inc shares jumped today

What happened

Shares Walmart Inc. (NYSE: WMT) are moving higher today after the company released a comprehensive second-quarter earnings report. The retailer reported its best comparable sales growth in more than a decade and raised earnings guidance as the company delivers comprehensive performance and strong industry growth. By 2:47 p.m. EDT, the company’s stock was up 9.7%.

So what

Comparable sales increased 4.5% in the quarter, led by growth in traffic, average transaction volume and e-commerce. At Sam’s Club, a membership-based club chain, same-store sales increased 5%, the fastest growth in six years, and comparable sales in the four largest international markets were also positive. U.S. e-commerce growth, which was a drag two quarters ago, is back to 40%, in line with forecasts for this year.

Image source: Walmart.

Total revenue rose 3.8% to $128 billion, topping analyst consensus of $126 billion. While currency-neutral operating income fell from $6 billion to $5.7 billion, this was expected as the company invests in higher wages and e-commerce, and the number of grocery pickup locations has now reached 1,800.

CEO Doug McMillon said: “We are pleased with customer response to the way we use stores and e-commerce to make shopping faster and more convenient. We continue to aggressively roll out grocery pickup and delivery options in the U.S. and recently announced the expansion of omnichannel initiatives in China and Mexico.”

What now

In addition to the strong quarter, Walmart said it will raise its earnings and comparable sales forecasts for this year. Management now anticipates comparable sales growth of 2% compared to the previous guidance of 1.5% to 2% and expects adjusted EPS of $4.90-$5.05 compared to prior guidance of $4.75-$5 .

In addition to its strong performance, Walmart is making smart decisions by reorienting its international portfolio towards growth, as it did with the purchase of a majority stake in Flipkart.

Walmart is taking all the right steps in an already strong retail environment. Today’s stock price surge is no surprise.

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