5 ETFs To Gain From Walmart Strength Post Q2 Results

Walmart (WMT - Free Report) spread optimism in the retail space by reporting robust second-quarter fiscal 2020 results. The mega retailer topped earnings estimates but fell shy of the consensus mark for revenues. Additionally, the company raised its full-year forecast, allaying all the negative sentiments around consumer demand in the wake of tariffs on imports from China.

Earnings per share came in at $1.27, beating the Zacks Consensus Estimate by 5 cents. However, the bottom line declined from the year-ago figure of $1.29. Revenues inched up 1.8% year over year to $130.4 billion but fell short of the estimated $130.5 billion. U.S. same-store sales grew 2.8% in the quarter and 7.3% on a two-year stacked basis, marking the strongest comp growth in more than 10 years.

E-commerce sales jumped 37% driven by strong growth in online grocery. Walmart now surpassed 1,100 grocery delivery locations and has more than 2,700 pickup locations. Its NextDay delivery service from Walmart.com now covers about 75% of the U.S. population.

The brick-and-mortar retailer lifted its fiscal 2020 view. It now expects U.S. same-store sales to grow at the upper end of its previously stated guidance range of 2.5-3%, and e-commerce sales is projected to rise 35%. Adjusted earnings per share are expected to range between a slight decrease and a slight increase compared with fiscal 2019 earnings.

Market Impact

Based on strong results, shares of WMT jumped more than 6% on the day — its biggest one-day gain in nearly two years. The stock also crushed its average daily volume figures as nearly 19.25 million shares moved hands compared with 6 million on average. Walmart currently has a Zacks Rank #2 (Buy) and a VGM Score of C. Further, it belongs to a top-ranked Zacks industry (top 22%), suggesting strong upside in the coming months.

Consequently, ETFs having the highest allocation to the world's largest brick-and-mortar retailer rose following the results. Below, we have highlighted six of them:

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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