It's also worth noting that shares of WMT had been running higher over the past month, up 11% sine mid-July. So, some investors may be taking advantage of that recent run to lock in some profits given that its EPS guidance came in on the light side. And lastly, the market is looking at a weak open this morning, so there is some broad-based selling going on.
As mentioned above, WMT's quarterly results are pretty solid. It reported EPS of $1.08, beating the Capital IQ consensus by a penny. This marked the eighth quarter in a row in which WMT beat the bottom line estimate. That said, WMT has had much wider beats over the past couple of years (it beat by $0.04 last quarter), so maybe there is also some disappointment that WMT barely edged out consensus.
WMT, of course, isn't a topline growth story, but there were a couple positives here. First, its revenue growth of 2.1% was actually its best performance since 3Q10 when revenue was up 2.8%. In fact, its revenue growth has been modestly improving since late 2015 when revenue was declining by 1-2% year/year. The improvement may not seem overly important, given we're dealing with low single-digit growth here. But, when factoring in the massive competitive threat from Amazon (AMZN), and online retail in general, any positive in terms of topline growth is worth pointing out.
U.S comparable sales increased by 1.8%, at the high end of its 1.5-2.0% guidance. That's also an improvement from last quarter's +1.4% figure. Specifically, strength in the grocery category helped push comps higher this quarter.
In order to combat the competitor pressures from AMZN, WMT has also been focusing on its e-commerce channel and it continued to make good strides here. Sales through Walmart.com surged by 60%, following 63% growth in Q3. The growth rates are strong, but, it is difficult to really move the needle for a company doing $122 billion in sales during a single quarter.
Overall, the Q2 numbers look fine overall. The Q3 comp guidance of +1.5-2.0% is also right inline with WMT's recent performance. So, it seems this morning's weakness is due to a combination of the factors noted above: 1). some disappointment in Q3 EPS guidance, 2). some profit-taking following the stock's run-up, and 3). weakness across the stock market this morning.