NEW YORK (TheStreet) -- Wal-Mart Stores (WMT) - Get Report released its second-quarter earnings report on Aug. 14. Results were slightly above Wall Street expectations on the top line, with revenue coming in at $120.1 billion versus the Wall Street estimate of $119.1 billion. Earnings per share dropped from the same quarter last year, falling from $1.23 a year ago to $1.21 in the most recent quarter.

Shares, at near $75, are down nearly 5% for the year to date, but are up over 1% for the past 52 weeks.

Walmart's comparable-store sales in the U.S. were unchanged year-over-year, which garnered much of the attention by investors as it stopped the streak of domestic sales declines that began in 2013.

Image placeholder title

However, what largely got lost in the shuffle were the encouraging results internationally and how they came to fruition.

1. Comparable-Store Sales Growth

The company experienced positive comparable-store sales growth in four of its five largest international markets in the second quarter.

  •  United Kingdom - 2.0% increase
  •  Canada - 1.9% increase
  •  Mexico - 0.2% increase
  •  Brazil - 9.7% increase

The increases in comparable-store sales largely came from growth in average ticket size for customers as opposed to traffic increases. Walmart only managed to increase traffic in its United Kingdom stores (up 1.7%). Brazil saw unchanged traffic, and Canada and Mexico realized traffic declines of 1.1% and 0.2%, respectively. The company is generally not bringing in more traffic in international markets, which should be a concern to investors, but the traffic that is coming in is purchasing more, as shown by rising average ticket sizes.

Walmart's ticket growth is shown below:

  •  United Kingdom - 0.3%
  •  Canada - 1.3%
  •  Mexico - 2.1%
  •  Brazil - 9.7%

In addition to comparable store sales growth in the markets above, Argentina, Chile, Japan and Africa also realized comparable store sales growth. Chile, in particular, got a boost from an unusual source, its new mobile application.

2. Walmart Chile's Mobile App

"Busy customers are telling us how they want to shop, and that they want us to do two things: save them time and save them money. They're looking for faster and, more importantly, convenient ways to shop," said Walmart Interntional CEO David Cheesewright on the earnings call.

Walmart's international strategy is focused on two goals: reducing prices for customers and increasing convenience. A year ago, Walmart launched a mobile app in Chile which allows customers to compare Walmart Chile store prices to competitor prices. The app has been a great success, with nearly 200,000 items scanned in the second quarter of Walmart's fiscal 2015 alone.

The mobile app in Chile is an example of how Walmart is innovating to provide better convenience to customers while highlighting its price advantage, similar to what it has done domestically via the recent introduction of its "Savings Catcher" mobile application

The Savings Catcher leverages Walmart's extensive data analytics capabilities to compare prices Walmart shoppers pay at Walmart to the best deals of competitors. If Walmart's prices are not the best, customers are paid the difference in prices with a Walmart gift card. The Savings Catcher app is a way for Walmart to communicate to customers that it is committed to delivering the lowest prices possible.

3. Walmart's British Operations Are Gaining Market Share

Walmart operates under the Asda brand in the U.K, which was named the lowest-priced supermarket in Britain by The Grocer magazine for the 17th year in a row. The British supermarket industry is highly competitive. Market share for the top four grocers, per Kantar UK Insights, in the UK is listed below:

  •  Tesco - 29.7%
  •  Asda - 17.6%
  •  Sainsbury's - 16.9%
  •  Morrisons - 11.6%

Walmart managed to gain market share in the second quarter, growing from 17.4% to 17.6% of total market share, as reported by Kantar. Asda reorganized ts operations in the second quarter by closing unprofitable stores, laying employees off, and consolidating the supply chain while placing a greater emphasis on e-commerce and something called Click and Collect. The Click and Collect program was rolled out in the most recent quarter, and lets customers shop online and pick up their purchased goods in-store.

4. E-Commerce Sales Are Exploding Around the Globe

Walmart celebrated the first anniversary of the launch of its Mexican e-commerce operations in the quarter. Web site traffic has nearly tripled since last year, and overall Walmart Mexico sales have increased 5%. Walmart's Mexican e-commerce site is now the third-most-visited e-commerce site in Mexico, according to industry research reports. Comparable-store sales in Mexico increased 0.20% on the quarter, while new stores and e-commerce added to revenue and earnings growth. Operating income grew 5.7% versus a 5% increase in sales, showing increasing margins in Walmart's Mexican operations.

In Canada, e-commerce sales growth was in the triple-digits percentage versus a year ago. Overall, net sales in Canada increased 2.9% in spite of strong competition from Target's expansion into Canada. The company grew comparable store sales as well, up 1.9%. Walmart Canada achieved strong sales growth by lowering prices, as suggested by the company. This caused operating margins to decline versus the same period a year ago.

Finally, the company's Chinese e-commerce sales grew by a double-digits percentage, and traffic increased in the triple-digits. Walmart's Chinese e-commerce division operates under the YiHaoDian name, which translates into English as "Number One Store." Walmart acquired YiHaoDian in late 2012 and has seen strong growth in e-commerce in China since that time. YiHaoDian had sales of 6.45 billion Yuan (about $1 billion US) in 2012. YiHaoDian grew revenue to 11.54 billion yuan in 2013 (about $1.85 billion). China's e-commerce market is expected to be as large as the U.S.'s as early as 2016 according to the European Travel Commission.

5. Walmart Capitalized on the World Cup in Brazil

Walmart's Brazilian operations grew sales by 9.1% in the quarter, and reported a comparable-store sales increase of a strong 9.7% versus the same quarter a year ago. Walmart increased comparable store sales over 4% in each of the previous two quarters in Brazil. The company increased its same-store sales more than its largest Brazilian competitor Grupo Pao de Acucar (CBD) - Get Report , which grew comparable-store sales 9.5% over the same period.

Walmart is investing heavily in Brazil. The company switched 80 stores in the country to a better integrated supply chain system in the quarter. The new supply chain system simplifies and standardizes operational processes, giving better visibility to business results and reducing compliance risk. The entirety of Walmart's Brazilian operations will be integrated into the new supply chain system by the end of next year, streamlining operations in the country and raising the prospect of improved sales and margins longer term.

Walmart May Be a Buy for Long-Term Investors

Walmart has long dominated discount retail in the U.S due to its supply chain efficiencies and vast physical store square footage. The company displayed strong sales growth throughout the globe in its most recent quarterly results.

Walmart is creating a long growth runway in countries as diverse as Brazil, India, and the U.K. Walmart is accomplishing such international sales growth by focusing on innovative ways to improve price perception and convenience for shoppers.

Walmart is a Top 10 dividend growth stock and solid buy based on the company's solid dividend yield of nearly 2.6%, conservative payout ratio under 40%, strong 10 year revenue per share growth rate of over 8%, and low standard deviation under 20%. The company's shares have a relatively attractive trailing P/E ratio of under 16, well below the S&P 500's trailing P/E ratio of around 19. Walmart's P/E ratio is at a discount to the overall market due to the company's weak U.S. sales and sluggish earnings per share growth in recent years.

The company has historically performed well during recessions and has extremely stable cash flows as shown by its stable earnings per share, which grew each year of the Great Recession of 2007 to 2009. Walmart's cash flows per share have increased each year going back as far as 1998, according to Value Line.

The company could make an excellent holding for long-term investors who demand current income as well as the opportunity for share price appreciation as Walmart enjoys strong global online sales growth.

TheStreet Ratings team rates WAL-MART STORES INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate WAL-MART STORES INC (WMT) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, reasonable valuation levels and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • WMT's revenue growth has slightly outpaced the industry average of 4.8%. Since the same quarter one year prior, revenues slightly increased by 2.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Food & Staples Retailing industry average. The net income increased by 0.6% when compared to the same quarter one year prior, going from $4,069.00 million to $4,093.00 million.
  • WAL-MART STORES INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, WAL-MART STORES INC reported lower earnings of $4.86 versus $5.01 in the prior year. This year, the market expects an improvement in earnings ($5.13 versus $4.86).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Food & Staples Retailing industry and the overall market, WAL-MART STORES INC's return on equity exceeds that of both the industry average and the S&P 500.

At the time of publication, the author was long WMT.