Here’s our annual high-level comparison of Amazon vs. Walmart.
From a growth perspective, Amazon wiped the floor with
Walmart. AMZN added $18 billion in revenue for a 20.2% growth rate, while WMT
shrank by $(3.5) billion or (0.7%). WMT’s
revenue was negatively affected by currency exchange rates moving against it,
but even adjusting for that WMT’s revenue wasn’t in the realm of AMZN
From a GAAP earnings perspective, WMT maintains its lead,
although that is diminishing. WMT’s GAAP operating margin was 5.0%, which was a
0.6 PPT improvement, while AMZN delivered 2.1% operating margin. However, AMZN’s
margin improved a whopping 1.9 PPT.
WMT’s net income still dwarfs AMZN at $14.7 billion vs. $0.6
billion. But again, the change is informative: as WMT launched programs for
higher associate pay and stronger e-commerce capability, its net income fell by
10.2% or $1.7 billion. Conversely, AMZN increased income by $0.8 billion from a
prior year loss. While this is an annual comparison, I’d be remiss if I didn’t
note that AMZN’s operating income exploded in the fourth quarter.
Cash provided by operations shows just how much AMZN is
closing the gap to WMT in overall performance. WMT delivered a huge $27.4
billion in cash from operations, or 5.7% of revenue, but that was a decrease of
$1.2 billion or a reduction of 0.2 PPT as a percentage of revenue. AMZN’s $11.9
billion of cash generated was 11.1% of revenue, a $5.1 billion increase and
3.45 PPT higher than the prior year.
WMT remains much better at returns on investment. Its ROIC
was 12.8% compared to 3.6% for AMZN, and its ROE was 17.3% vs. AMZN’s
4.9%. (Returns were calculated using a
two-point BOY/EOY average).
Of course, valuation metrics are hugely in AMZN’s favor. As
of this writing on June 10th, you’ll need to pay 296 times earnings
to own AMZN at a price to sales ratio of 317%, while WMT can be purchased for 15.8
times earnings at a price to sales ratio of 46%.
Full disclosure, I own shares of WMT.
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