AMZN: Better buy for 2022: Amazon vs. Walmart


According to a Mastercard Inc (MY) report, United States retail sales increased 8.5% during this year’s holiday shopping season, fueled by the surge in e-commerce sales. Even as the Omicron variant of the coronavirus continues to spread, making the outlook bleak for physical retail stores, many retail companies have stepped up their online presence to benefit from online shopping trends. However, increasing physical store sales as the economy reopens should help retailers thrive in the coming months. According to a Research and Markets report, the global retail market is expected to grow at a 7.7% CAGR by 2025. Therefore, Amazon.com (AMZN) and Walmart (WMT) should benefit.

E-commerce giant AMZN is dedicated to the international retailing of consumer products and subscriptions. It operates across North America; International; and Amazon Web Services. WMT engages in retail, wholesale and other units around the world. The company operates through Walmart US; Walmart International; and Sam’s club.

AMZN has gained 1.5% in the past three months, while WMT has gained 3.8%. Which of these two titles is the best buy now? Let’s find out.

Latest developments

On December 15, 2021, WMT announced plans to build a new distribution center in Salt Lake City to support the retailer’s growing e-commerce business. Steve Miller, senior vice president of supply chain operations at Walmart US, said, “This new facility is the latest example of Walmart’s commitment to providing customers with fast delivery of the items they need every day. day, and we look forward to continuing to deliver on that promise. with the development of this new state-of-the-art facility.

On December 2, 2021, Amazon Web Services, Inc., an AMZN Company, announced AWS Cloud WAN, a managed wide area network service that enables businesses to build, manage, and monitor faster and easier a unified global network that connects transparently. cloud and on-premises environments. This could lead to increased demand for its solution.

Recent financial results

WMT’s total revenue increased 4.3% year-on-year to $ 140.53 billion for the fiscal third quarter ended October 31, 2021. Company net profit increased 39.8% year-on-year to $ 5.20 billion. In addition, its adjusted EPS stood at $ 1.45, up 8.2% year-on-year.

AMZN’s net sales increased 15% year-on-year to $ 110.81 billion for the third quarter ended September 30, 2021. However, its net profit declined 50.2% year-on-year to $ 3 , $ 15 billion. In addition, its EPS stood at $ 6.12, up 50.5% year-over-year.

Past and expected financial performance

WMT’s revenue and EPS have grown at CAGRs of 3.8% and 17.5%, respectively, over the past three years. Analysts expect WMT’s revenue to grow 2.3% in the current year and 2.9% next year. The company’s EPS is expected to grow 7.9% in the current quarter and 17% in the current year. In addition, its EPS is expected to grow at a rate of 8.1% per year over the next five years.

On the other hand, AMZN’s revenue and EPS have grown at a CAGR of 27.5% and 42%, respectively, over the past three years. The company’s revenue is expected to grow 21.8% in the current year and 17.7% next year. However, its EPS is expected to decline 73.4% for the fourth quarter of 2021 and 2% for the full year. AMZN’s EPS is expected to grow at a rate of 36% per year over the next five years.

Profitability

WMT’s last 12 months revenue is 1.25 times that generated by AMZN. However, AMZN is more profitable with gross profit and net profit margin of 41.31% and 5.73% compared to WMT’s 25.04% and 1.40%, respectively.

On the other hand, WMT’s ROA and ROTC of 7.45% and 12.07% are higher than 5.32% and 8.10% of AMZN, respectively.

Evaluation

In terms of non-GAAP futures PER, AMZN is currently trading at 81.71x, which is 262% higher than WMT’s 22.57x. Additionally, AMZN’s advanced EV / EBITDA ratio of 25.20x is 105.9% higher than WMT’s 12.24x.

So, the WMT is relatively affordable here.

POWR odds

WMT has an overall rating of A which equates to a strong buy in our property POWR odds system. On the other hand, AMZN has an overall rating of C, which translates to Neutral. POWR scores are calculated taking into account 118 different factors, each factor being weighted to an optimal degree.

WMT has a B rating for growth and sentiment, in line with analysts’ expectations that its EPS will increase in the coming months. On the flip side, AMZN has a D rating for growth and a C rating for sentiment, in line with analysts’ expectations that its EPS will decline in the near term.

Additionally, WMT has a B rating for value, consistent with its forward EV / S of 0.80x, 59.9% below the industry average of 1.99x. However, AMZN has a D rating for value, consistent with its forward EV / S of 3.72x, 161.3% above the industry average of 1.42x.

Additionally, WMT has a B rating for stability, in line with its beta of 0.52. In comparison, AMZN has a C rating for stability, in line with its beta of 1.13.

Of the 39 shares rated A Grocery Stores / Big Box Retailers industry, WMT is ranked No. 3. However, AMZN is ranked 32nd out of 77 stocks in the F ranking the Internet industry.

Beyond what I stated above, we also rated the stocks for quality and momentum. Click here to view all WMT odds. Also get all AMZN ratings here.

The winner

The retail sector is expected to experience significant growth with the rapid shift to online platforms amid rising consumer spending. While WMT and AMZN both stand to benefit, I think WMT is currently the best investment due to its strong finances, lower valuation and better growth prospects.

Our research shows that the chances of success increase when investing in stocks with an overall strong buy or buy rating. View all the other top rated stocks from the Grocery / Supermarkets sector here. Also click on here to access all of the top rated stocks in the internet industry.


AMZN stock was trading at $ 3,407.54 per share on Monday afternoon, up $ 73.20 (+ 2.20%). Year-to-date, AMZN has gained 4.62%, compared to a 29.25% increase in the benchmark S&P 500 over the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal’s a passionate interest in the analysis and interpretation of financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach he takes while advising investors in his articles. Following…

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