Walmart Delivers Earnings Triumph; E-Commerce Sales Double

Shares in Walmart (WMT) surged 6% in Tuesday’s pre-market trading to reach an all-time high, before pulling back, after the retail giant announced stellar earning results.

Specifically, Q2 Non-GAAP EPS of $1.56 beat Street expectations by $0.31 while GAAP EPS of $2.27 also topped consensus forecasts by $0.99. Revenue of $137.7B easily beat consensus by $3.93B- and increased 5.6% from the same period last year.

Meanwhile Walmart US comparable sales of 9.3% came in very strong compared with the consensus of 5.4%, with e-commerce sales exploding 97% during the period.

“The company’s net sales and operating results were significantly affected by a continuation of the global health crisis” Walmart stated, adding that “Increased demand for products across multiple categories led to strong top-line and gross margin results.”

It’s membership-only warehouse chain, Sam’s Club, delivered a comp sales increase of 13.3%, with eCommerce sales up 39%. According to WMT, reduced tobacco sales negatively affected sales, although growth in membership income was the highest quarterly increase in more than five years.

However, Walmart International net sales were $27.2 billion, a decrease of 6.8% due to changes in currency rates and the effects of the government-mandated closure of the company’s Flipkart business in India.

Finally, consolidated gross profit rate increased 63 basis points thanks to higher-margin general merchandise categories, fewer markdowns and better margins on fuel, partially offset by the carryover of investments in price from last year. Spending associated with stimulus payments in the U.S. positively affected sales of general merchandise, the company added.

Shares in Walmart are up 14% year-to-date, and the stock scores a bullish Strong Buy Street consensus. That’s with an average analyst price target of $141 for upside potential of 4%.

“WMT has developed an efficient omni-channel customer experience and structural competitive advantages considering scale and buying power” commented Guggenheim analyst Robert Drbul. He also notes that the company continues its commitment to returning cash to shareholders through its dividend and share repurchase program.

“For these reasons, we think WMT shares warrant a premium multiple” the analyst concludes. He has a buy rating on Walmart with a $145 price target, adding that the long-term outlook is positive. (See WMT stock analysis on TipRanks).