Walmart Inc. ( WMT ) shares are trading lower Thursday after the retail giant posted mixed second-quarter results.

What To Know: Analyst Christopher Horvers at J.P. Morgan said fundamentals were strong but weighed down by higher-than-expected costs from self-insurance claims, which diluted earnings per share by about 4 cents to 5 cents. He noted that excluding those charges, earnings would still have fallen short of consensus estimates by roughly 1%. Reported EPS of 68 cents missed the Street's 74 cents forecast, though it grew 1.4% year over year.

Horvers pointed out that U.S. comparable sales rose 4.6%, slightly above J.P. Morgan's 4.5% estimate and ahead of Wall Street's 4.0% projection. He also mentioned that Walmart ( WMT ) captured share across all income cohorts, with grocery sales up by mid-single digits, health and wellness sales up by the mid-teens, and general merchandise posting low single-digit growth. Gross margins expanded slightly, but operating margins fell nearly 60 basis points year over year, coming in below Street expectations.

The analyst also emphasized that guidance was more encouraging. Walmart ( WMT ) has raised its full-year outlook, with consolidated sales now expected to grow 3.75–4.75% compared to 3–4% previously, and EPS projected at $2.52–2.62, up from $2.50–2.60. For the third quarter, management guided EPS between 58 cents and 60 cents, above Wall Street's 57 cents. E-commerce and advertising continued to show strength, with U.S. e-commerce sales up 26% and U.S. advertising up 31%.

Overall, Horvers noted that the disappointing second-quarter EPS created short-term pressure on the stock, but he stressed the report does not fundamentally alter the longer-term bullish case for Walmart ( WMT ).

WMT Price Action: Walmart ( WMT ) shares were down 5.02% at $97.40 at the time of writing, according to Benzinga Pro.

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